Internet Tax Ban Extension Stalls in Senate

Tod Hunter
WASHINGTON — The Senate Commerce Committee canceled a vote on Thursday that would have extended a moratorium on state Internet access taxes for at least four more years. The ban on access taxes has been in place since 1998, and was last reinstated by Congress in 2004 for a period of three years, ending Nov. 1.

"I am disappointed that the Commerce Committee was unable to act on legislation to extend the Internet tax moratorium at today's [meeting]," Commerce Committee Chairman Sen. Daniel Inouye, D - Hawaii, said in a statement.

The question of extending the ban on Internet access taxes was discussed last May in a hearing before the House Judiciary Committee's Subcommittee on Commercial and Administrative Law.

The bill under consideration Thursday, sponsored by Senators Tom Carper, D - Del., and Lamar Alexander, R - Tenn., would extend the Internet tax moratorium for another four years. A similar measure was recently introduced in the House by John Conyers, D. - Mich., chairman of the House Judiciary Committee.

Senators on both sides of the issue had sought a compromise that would have extended the moratorium to six years. The four-year extension is backed by the National Governors Association and includes a "grandfather" clause that would allow the handful of states which had Internet access taxes in place in 1998 to continue imposing the taxes.

Internet service providers, including telephone and cable companies, favor a different bill backed by Senators John Sununu, R - N.H., and John McCain, R - Ariz., which would make the ban permanent. Inouye canceled the vote on Thursday when it became apparent that several senators from both parties would vote for the permanent ban.

Internet service providers have claimed that the price of Internet access could rise by as much as 17 percent if the moratorium on state taxes is allowed to expire.