A top U.S. Senate Republican has called for legislation to keep Congress from extending an ancient and still-operating telecommunications tax to Internet access.
Sen. George Allen (R-Virginia) said April 12 that such a bill is needed after the Joint Committee on Taxation suggested expanding the 3 percent federal telecommunications excise tax–enacted to pay for the Spanish-American War–to the Internet, including for email and data services.
The excise tax now raises a reported $6 billion a year, and has been eliminated and reinstated and hiked to 25 percent during its life, which Congress made permanent in 1990.
"We won the Spanish-American War over 100 years ago," Allen told reporters at a press conference. "This tax represents an unnecessary service tax on consumers."
Congress extended a federal moratorium on Internet-access tax in November 1994, which applies to any new Net-only taxes that state and local governments might pass. Allen, who co-sponsored that moratorium extension, said the moratorium did not apply to the telecommunications excise tax.
The bill he proposes would not ban taxes on Internet telephony, however, which the senator said would be addressed under separate legislation in due course.
When the Joint Committee on Taxation proposed taxing all Net traffic, during a January session, that was one of three options the committee suggested, the others being extending the excise tax to Internet voice traffic and redefining the way long distance calls are taxed without taxing Internet data and voice traffic.
The Internal Revenue Service has also called for public comments on whether Internet telephony should be subject to telephone taxes.
Allen–who sits on the Senate Commerce, Science, and Transportation and Small Business and Entrepreneurship Committees–said his proposed legislation would basically head Internet-access taxation off at the pass before it gains momentum. "It's very important," he told those assembled at the press conference, "to put your flag in the ground and say, 'we're staking this territory—this hill will stay tax-free.’"
