WASHINGTON-More than 100 small and medium-sized telephone companies Tuesday urged the Senate to pass the Internet Tax Non-Discrimination Act.
“Currently billions of dollars of investment in further deployment of high-speed Internet access is at stake as telecommunications companies are forced to sit on the sidelines of the high-tech marketplace unsure of the regulatory and tax treatment of the Internet. Should state and local governments be allowed to tax Internet access, much of this economic investment could go unrealized as higher prices to consumers would likely impede demand for high-speed Internet,” reads a letter sent to all senators.
Senate Majority Leader Bill Frist (R-Tenn.) has said he wants to bring up the Internet tax moratorium bill soon. Speculation on a timeline for the decision has ranged from next week to the first week of May.
The telephone companies also called on Congress to adopt “a modernized definition of Internet access,” which the companies claim will level the playing field. Wireline companies have often complained that digital subscriber line service is regulated and taxed like voice telephony, while wireless broadband and cable modem services are not.
The permanent moratorium on Internet access taxes was derailed earlier this year when Sen. Lamar Alexander (R-Tenn.) said to restrict states and localities from taxing the Internet was an unfunded mandate. Alexander offered his own legislation that would have extended the current moratorium for two years while funding mechanisms were worked out.
Alexander’s state of 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 their tax, but when pro-Internet lawmakers tried to make the Internet tax ban permanent, the legislation they introduced also eliminated the exemption.
Local governments have been vocal opponents of a permanent ban.
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 the two-year moratorium would give Congress and the Federal Communications Commission time to deal with all of the implications of VoIP.
