Although members of Congress talked fervently since January about the need to extend the federal ban on discriminatory and access taxes on the Internet before it expired Oct. 21, the expiration has come and gone without action.
While no state or local government rushed to tax online access last week, industry insiders disagree on the possibility for such levies if Congress does not quickly reinstate the moratorium.
Most state legislatures have adjourned for the year, leaving only a handful of states able to pass new tax laws even if they wanted to. In the view of some Internet service providers, the threat is slim because the taxes are generally unpopular, especially with elections looming.
However, prior to the federal moratorium, passed in 1998, seven states enacted such tax laws. And in todays slowing economy, state and local lawmakers may face increased pressure to find new revenue sources.
“I wont be surprised when a state does try to enact an access tax,” said Bartlett Cleland, vice president of the Information Technology Association of America, in Washington.
The House of Representatives passed a two-year extension of the moratorium this month, but the Senate has not yet acted on it. According to industry sources, several senators are backing the House measure, but others continue to try to include controversial provisions regarding state tax simplification and the authority of states to collect Internet sales taxes.