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Internet tax ban extended in US until 2007


The US Congress on Friday finally approved legislation that extends a ban on internet access taxes. Debate over the ban, which expired on 1st November 2003, had stalled over proposals that the moratorium be made permanent.

A series of temporary bans on internet access taxes have 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.

US debate on a proposed extension has been vigorous, with the House of Representatives passing a Bill in September 2003 that sought to create a permanent ban. The White House has also indicated that it favours such a ban.

But the Senate was not convinced and movement on the legislation stalled until April, when the Senate finally reached agreement on text that would extend the ban only until November 2007.

The House of Representatives held back, still arguing for a permanent ban, but with the end of the Congressional Session fast approaching it finally caved into pressure last week, passing the Internet Tax Nondiscrimination Act by a voice vote on Friday. The Act will now be sent to the White House for approval by the President.

In general terms the measure provides for a four-year ban, retroactive to 1st November 2003, on internet access taxes, together with a prohibition on States and localities from imposing multiple and discriminatory taxes on electronic commerce.

"Enacting this legislation is a big win for the majority of American internet users," said Representative F James Sensenbrenner Jr, Chairman of the House Judiciary Committee.

"Without any action by this Congress, internet commerce would be subject to State and local taxes in thousands of jurisdictions. The digital economy and its participants are more vulnerable if we do not act – even if this legislation is far inferior to the bipartisan legislation the House passed last year that permanently banned internet access taxes," he added.

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