Permanent Net Tax Ban: Wait 'Till Next Year

It's wait 'till next year for a permanent federal ban on Internet access taxes, after the Senate couldn't agree on specifics on how to extend it, according to a report published late yesterday, November 25. And that means among other things that there could be moves by states to pass some form of Internet access taxes when they return to work after the new year begins, and before the Senate can get back to work on the compromise measure.

Citing a spokeswoman for Senate Majority Leader Bill Frist (R-Tennessee), the Washington Post said negotiations on the size and range of the bill broke down after almost three weeks following the expiration of a temporary moratorium November 1.

The permanent moratorium was targeted by co-author Sens. Ron Wyden (D-Oregon) and George Allen (R-Virginia) for inclusion in a $284 billion spending package, the Post said, but it was left out of the final package filed late November 25. "We do not expect any more action on this bill this year," Wyden spokeswoman Carol Guthrie told the paper.

The Senate proposal would have stopped several states who could still collect such access taxes despite the original moratorium for three more years, though the House's version would stop them immediately.

The Senate permanent moratorium plan bogged down over whether, as critics argued, the permanent Net access ban was written so broadly that it would keep telecommunications carriers "freeā€¦from a range of taxes that provide critical funding for state and local governments," the paper added. An Allen spokesman, Mike Waldron, told the Post the Senate's "fail(ure to act" means the "taxing gates have now opened for states that wish to tax access to the Internet and DSL service."

Not right away, however. "There are only a few state legislatures in session at this time of year, making a sudden profusion of Internet access taxes at the state level unlikely," the Post said. "The Senate will try to reach an agreement on the ban early next year, but the chances of states trying to pass new taxes for the Internet increase as more legislatures open their annual sessions in January and February."