WASHINGTON-The move to permanently ban Internet access taxes was thrown a curve ball on Wednesday when senators from states that had grandfathered taxes introduced a bill that would only ban the taxes for two years.
“The other option is the wrong policy and it couldn’t come at a worse time,” said Sen. Lamar Alexander (R-Tenn.).
Tennessee is one of the states that taxes Internet access. When the original Internet tax moratorium was put in place several years ago states like Tennessee were allowed to keep theirs, but when pro-Internet lawmakers tried to make the Internet tax ban permanent the legislation they introduced also eliminated the exemption.
Alexander was joined at a Capitol Hill press conference by other senators including Sen. Kay Bailey Hutchison (R-Texas), who also is a co-sponsor of the permanent ban. Hutchison said she will keep her name on both bills in hopes that a compromise can be reached. Alexander’s Tennessee colleague, Senate Majority Leader Bill Frist would like to move Internet tax legislation soon.
Local governments have been vocal opponents of a permanent ban and Sen. Diane Feinstein (D-Calif.) said 118 cities had contacted her regarding the impact of a permanent moratorium. Feinstein, a former mayor of San Francisco, said that much city interest was a record for her Senate tenure.
The Internet tax debate has recently become complicated with the emergence of voice over Internet protocol. It is conceivable that Internet telephony calls made through a cable line would not be taxed but calls made over a wireless or wireline connection would because these latter calls would be considered telecommunications calls while the former would be considered information services. Sen. Thomas Carper (D-Del.) said that the two-year moratorium would give Congress and the Federal Communications Commission time to deal with all of the implications of VoIP. The FCC is scheduled to propose rules on VoIP services at its meeting on Thursday.
