WASHINGTON-While the wireless industry said it would prefer a permanent ban on Internet access taxes, the Cellular Telecommunications & Internet Association and several high-profile wireless companies said Wednesday they support a compromise bill that would eliminate the access taxes for four years.
“While the wireless industry prefers a permanent ban on Internet taxes, McCain’s compromise ensures that all types of Internet access will be free from taxes for the next four years. This technological neutrality is critical, eliminating loopholes that would remain if the current law were simply extended,” said CTIA.
Sen. John McCain (R-Ariz.), chairman of the Senate Commerce Committee, has proposed that all Internet taxation be banned for four years instead of the proposed permanent Internet access tax that has received criticism from state and local governments.
As of late Wednesday, the McCain compromise, as it is known, was still receiving stiff opposition from Sen. Lamar Alexander (R-Tenn.), a former governor.
Alexander claims it is not fair to tell states they cannot tax telecommunications services-even if those services are Internet services. Alexander emerged as a champion of the states after the original proposal suggested eliminating a grandfather clause from the ban that expired last year. That grandfather clause allowed some states to continue to tax Internet access. Alexander offered his own legislation that would have extended the current moratorium for two years while funding mechanisms were worked out.
However, the Consumer Internet Access Coalition (CIAC), comprised of 39 groups including CTIA, sent a letter to the full U.S. Senate urging its support of the McCain-sponsored legislation. Other wireless groups that signed the letter included Alcatel Corp., Nortel Networks Ltd, Siemens AG, Verizon Wireless and the Telecommunications Industry Association.
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.
