Out-Law / Your Daily Need-To-Know

Will they, won’t they? US Senators debate a permanent internet tax ban

11 Nov 2003, 12:00 am

With a two-year moratorium on internet access taxes having expired on 1st November, the US Senate is in debate over whether the ban should be made permanent. An attempt on Friday to enact a Bill making the ban permanent was not successful, but Senators are hopeful that an agreement on the Bill can be achieved this week.

A series of temporary bans on internet access taxes has been in place in the US since 1998, forbidding states to create any new taxes on internet connections for fear of stifling the growth of e-commerce. But this ongoing ban has been subject to criticism, particularly from budget pressed Governors who would welcome additional tax income.

Both the White House and the House of Representatives are in favour of a permanent ban, with the House of Representatives voting in favour of a related Bill in September. But opposition to a permanent ban appears stronger in the Senate, which has indicated a preference for extending the temporary ban.

Senators admitted on Friday that they had not reached agreement on a permanent ban but said that negotiations would continue. The difficulty relates to broad wording in the Bill that could be interpreted as extending the ban to phone services, pager services and other services likely to be available on the internet in the future.

Opponents of the ban said that to extend the moratorium to cover these additional technologies could cost as much as $9 billion a year in lost revenue by 2006.

According to the New York Times, the sponsors of the Bill, Senator Ron Wyden of Oregon, and Senator George Allen, Republic of Virginia, said that a temporary extension would be acceptable, if opponents agree to an extension of the technologies covered by the ban.