WASHINGTON-A group of states said the House-passed Internet tax moratorium will cost cities and states up to $9 billion a year annually by 2006.
A study issued by the Multistate Tax Commission said the loss in revenue is greater than it should be because the legislation goes beyond shielding Internet access from taxation and creates a broader exemption that could preclude states and municipalities from collecting taxes on wireless service and other telecom offerings.
“Our legal reading of the new expansive language in H.R. 49 is that it will effectively rope off the telecommunications industry local and state taxes,” said Tennessee Revenue Commissioner Loren Chumley. “It does not matter if the legislation’s proponents insist that was not their intention here. Intention doesn’t count in court when it comes to tax matters.”