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.
