House Approves Internet Tax Ban Extension

The House of Representatives approved a new four-year ban on state or local taxation of Internet, Oct. 16, over the objections of both Republicans and Democrats seeking a permanent ban. The current three-year ban on access taxes expires on Nov. 1.

The legislation also extends the grandfather clause in the original 1998 legislation that allows a handful of states to continue taxing Internet connections. In addition, the bill prohibits state and local governments from imposing other levies and fees that treat Internet commerce differently than brick-and-mortar businesses.

Despite the call for a permanent ban, the Internet Tax Freedom Act (H.R. 3678) passed the House on a 405-2 vote with only Silicon Valley Democrat Anna Eshoo and Republican Michael Turner of Ohio voting against the measure.

Eshoo, who introduced legislation earlier this year to make the ban permanent and gained 240 co-sponsors for the bill, said a temporary extension is bad public policy.

“We want to broaden broadband in the country. The best policy is to make it permanent,” she said. “I regret that the House position today has been really diminished. I really dont know why weve fallen back to four years.”

Under the House rules for the vote, no amendments were allowed to the legislation.

“If a vote on a permanent ban would be brought to the floor, it would pass overwhelmingly,” Rep. Bob Goodlatte (R-Va.) said. “We werent given the opportunity to vote on what is the will of the House.”

The legislation now heads to the U.S. Senate. In 2003, the House voted for a permanent ban on Internet access taxes but the effort ultimately failed in the Senate.

“I strongly favor a permanent ban, but we have to face facts,” Rep. Zoe Lofgren (D-Calif.), who represents part of the Silicon Valley, said. “The permanent ban will not pass in the Senate.”

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Rep. Mel Watt (D-N.C.), who led the Democrats floor debate supporting the extension, added, “The current ban will expire on the last day of this month if we do not act now. The Senate has not done anything yet and it has made clear a permanent moratorium would be dead on arrival.”

Watt brushed aside criticisms that the ban should be permanent.

“I dont know anyone in the technology industry who has said theyll stop innovating because [the ban] is only four years. This not partisan politics; it is practical politics,” he said, noting that Congress could come back at a later date and make the ban permanent.

In the Senate, minority leader Mitch McConnell (R-Ken.), along with fellow Republicans John Sununu of New Hampshire, Ted Stevens of Alaska and John Ensign of Nevada are expected to push for a permanent moratorium on access taxes.

“I am disappointed that the House only passed a four-year extension of the ban, but Americans should know that a majority of Congress, including Democrats and Republicans, are fighting to make this permanent,” Ensign said at an Oct. 16 press conference. “When this bill reaches the Senate, I am hopeful that my colleagues will vote to keep the government from taxing this invaluable resource.”

Three years ago, when the ban was last up for a vote, opposition from state and local governments killed the initiative for a permanent ban. Sen. Lamar Alexander (R-Tenn.), a former governor, led the opposition and effectively kept the ban temporary. This time around, Alexander and Sen. Tom Carper (D-Del.), another former governor, are endorsing a four-year extension of the ban.

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