House Approves Senate Version of Internet Tax Ban

The U.S. House fell into line with the Senate Oct. 30 voting 402-0 to extend the ban on Internet connection taxes for another seven years. The legislation now heads to President Bushs desk. The current three-year moratorium is due to expire Thursday.

The Internet Tax Freedom Act (H.R. 3678) passed the House Oct. 16 with a four-year ban but the Senate version of the bill added another three years. The House action Oct. 30 reconciles the legislation with the Senate version.

“Unlike the Republican-controlled Congress, which allowed the moratorium on taxes on Internet access to expire for more than a year, the Democratic Congress voted today to extend the moratorium on time,” House Speaker Nancy Pelosi, D.-Calif., said in a statement.

First passed into law in 1998, the measure bars state and local governments from taxing broadband connections and imposing other levies and fees that treat Internet commerce differently than brick-and-mortar businesses. The legislation also extends the grandfather clause in the original 1998 legislation that allows a handful of states to continue taxing Internet connections.

Silicon Valley Rep. Anna Eshoo, D.-Calif., who voted against the four-year extension two weeks ago, voted in favor of the bill this time around. In January, Eshoo introduced legislation that would have made the ban permanent.

“I opposed the bill because it included only a four-year extension of the moratorium and language that could have opened up the possibility of new taxes on Internet services like e-mail and music downloading,” Eshoo said in a statement. “I knew we could do better and today we did.”

Republicans also praised passage of the bill, but insisted the ban should be permanent. Three years ago when the ban was last up for renewal, the Republican House passed a permanent bill but the legislation stalled in the Senate, also then controlled by the GOP, over opposition from state and local governments.

“When it comes to taxing the Internet, Republicans have not wavered in our belief that it ought not happen today, tomorrow, four years from now, or any time after that,” House Minority Whip Roy Blunt, R.-Mo., said in a statement.

Blunt added, “Democrats in Congress have taken a far more nuanced position on the matter, having decided that imposing new taxes on our digital economy right now is unpalatable, but that resurrecting the plan sometime in the future may hold greater promise.”