7-year Internet tax ban heads to president

The U.S. House of Representatives passes a seven-year Internet tax ban.

The U.S. House of Representatives has approved a seven-year extension to an Internet tax ban, the final step before the legislation heads to President George Bush to be signed into law.

The House approved the Senate version of the Internet tax moratorium, which would ban Internet-only taxes such as access taxes for seven years. The current ban has been in effect since 1998, except for a lapse during most of 2004.

Many supporters of the moratorium had called for a permanent ban, but some lawmakers and state and local government groups had raised concerns that a permanent ban would hurt state and local governments' ability to raise money. Opponents of a permanent ban also questioned if telecom carriers would try to expand the ban to services such as VOIP (voice over Internet Protocol).

Bush is expected to sign the legislation. He has supported an Internet tax ban, and he signed the last extension, passed by Congress in late 2004.

The ban on Internet taxes expires Thursday in the U.S.. Lawmakers in favor of extending the ban say it's important to promote the adoption of broadband, which in turn, creates jobs and improves the U.S. economy.

Earlier this month, the House passed a four-year extension. After the Senate passed the seven-year ban, the House voted 402-0 for the seven-year ban.

The tax moratorium does not ban sales taxes online. It applies only to taxes that would be unique to the Internet, including taxes on Internet access.

Senator John Sununu, a New Hampshire Republican, praised the House for passing the seven-year ban, which he cosponsored. The Senate version of the bill, awkwardly named the Internet Tax Freedom Act Amendments Act, specifically exempts e-mail and instant messaging from taxes after some groups raised concerns that the House version of the bill could allow taxes on those services.

"It's great to see Congress act on time for a change and take an enormous step for Internet tax freedom -- banning access taxes and protecting e-mails and instant messaging for the next seven years," Sununu said in a statement. "I will continue to fight for a permanent ban on access taxes, but this is a strong step forward. Taxing the Internet is wrong for consumers and wrong for the economy."

The United States Telecom Association, a trade group, and Verizon Communications both praised Congress for passing the extension.

"Broadband access is now a crucial driver of America's economy, and this moratorium extension will ensure continued investment and growth in the broadband marketplace," Peter Davidson, Verizon's senior vice president of federal government relations, said in a statement. "This is good for consumers and businesses across the country."

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Grant Gross

IDG News Service

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