Senator Moves to Block Internet Tax

WASHINGTON — After successfully leading an effort to block state governments from imposing taxes on web businesses, Sen. George Allen, R-Va., is now fighting to keep the web free from federal taxes.

Allen this week introduced legislation that would keep both dial-up and broadband services tax free. The move is a response to a growing movement in Congress to extend the century-old federal excise tax on telephone services to the Internet.

“I will be introducing legislation to keep the federales from imposing a tax on the Internet,” Allen said before Monday’s Congressional session, taking a mild swipe at the FET, which was initially intended as a temporary measure to fund the Spanish-American War.

Since January, Allen has been rallying support from both fellow Republicans and key Democrats to quash a recommendation made by the House and Senate joint tax committee to levy a 3 percent FET on Internet use.

"When the temporary tax on telephones was passed in 1898, there were just 1,300 telephones; they really were a luxury item," Allen said. "Today 200 million Americans use the Internet, not just plain old telephone service. Over 55 percent of them surf the Net on high-speed, broadband connections.”

Last July, the IRS and Treasury Department hinted that the Spanish-American War tax on phone calls could be interpreted to include new technologies, such as the Internet, a claim Allen refutes.

“Outdated taxes like the FET stop Americans from using new, innovative and increasingly integral Internet services like VoIP,” Allen said. “The principle of my [bill] is to make the Internet remain as accessible as possible to all people in all parts of our country, forever."

In 2004, Allen spearheaded a bill to prohibit state and local governments from setting web surcharges. As part of a compromise, however, VoIP was left out of the final draft passed into law because it is considered a telephone service. The FET on phone services brought in an estimated $5 billion in tax revenues last year.

At the time, many lawmakers argued that the law would deny states and communities significant revenues, an issue that is sure to come up again when debate begins on Allen’s current bill, which also would repeal the VoIP tax.

But Allen said the government, and the economy as a whole, would benefit more from revenues created by unfettered growth of the Internet and services such as VoIP than from any possible tax revenue.

"By expanding this [FET] tax, the federal government would hinder the investment and deployment of broadband services and would impact the economic growth of small businesses, especially in smaller towns and rural areas," said Allen.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

X3 Expo Day 2 Delivers Stars, Screenings and Fan Favorites

The sun once again shone brightly on the historic Hollywood Palladium as throngs of avid fans made their way through the doors, ready to experience Day 2 of the 2026 X3 Expo.

X3 Expo Kicks Into Gear With an All-Star Lineup

Outside the historic Hollywood Palladium on Friday, a huge crowd of fans lined Sunset Boulevard, eagerly awaiting the opening of the 2026 X3 Expo and their big chance to meet the cream of the crop of adult stars.

2026 XBIZ Honors Salutes Resilience Across the Online Adult Industry

The 2026 XBIZ Honors packed house Wednesday night, turning the Kimpton Everly Hotel’s Nichols Ballroom into a gala celebration of industry excellence.

Elevated X Adds CCBill Integration for Payment Processing

Elevated X has added CCBill integration for payment processing to its ELXNexus traffic management and affiliate program software.

Florida Congressman Files Latest Bill to Repeal Section 230

Rep. Jimmy Patronis of Florida has become the latest member of Congress to propose legislation that would repeal Section 230 of the Communications Decency Act, which protects interactive computer services — including adult platforms — from liability for user-generated content.

Irish Parliamentary Committee Weighs Stricter AV Laws

The Irish national parliament’s Joint Committee on Arts, Media, Communications, Culture and Sport met Wednesday to discuss regulation of online platforms and improving online safety, including calls for stricter age verification by adult sites.

Ofcom Issues Guidance on Age Check Placement for Adult Sites

U.K. media regulator Ofcom on Wednesday published its recommendations for where and how adult sites should deploy age checks as required for compliance with the Online Safety Act.

Tubes Booster Launches Web Hosting Solutions

Content hosting platform Tubes Booster has launched two new hosting solutions.

YourPaysitePartner Rebrands as Paysite.com

YourPaysitePartner has officially been rebranded as Paysite.com.

SWR Data Announces 2026 'State of Creator' Winter Report

Adult industry market research outfit SWR Data has announced that it will release data from its annual State of the Creator survey at an XBIZ LA workshop, taking place at the Kimpton Everly Hotel.

Show More