Last-Ditch Senate Battle Underway Over Broadband
Taxes.
The issue of whether to tax Internet service
providers is threatening to tie up the U. S. Senate for the rest
of the week, as pro-tax Senators led by Lamar Alexander
(R-Tenn.) make a last-ditch effort to pass legislation that will
enable states and local governments to levy such taxes.
Because the House has already approved a bill
banning Web taxes, and President Bush Monday called for tax-free
broadband service, the Senate faces an uphill fight in what has
turned out to be a surprisingly spirited debate. Compromise
legislation by Senator John McCain (R-Ariz.) gained some
traction Monday and is scheduled to be discussed by the Senate
later this week.
McCain, who is chairman of the Senate Commerce
Committee, wants to ban Internet taxes for four years. His
proposal would not include VoIP telephone services. The entire
issue of taxing Web telephoning is in a sort of legislative and
legalistic limbo, as different states and different legal
jurisdictions have different opinions on the issue. Much of the
litigation is expected to end up at the Supreme Court for final
disposition. In addition, Senator McCain this week is beginning
hearings on the 1996 Telecommunications Act with an eye to
revising the Act.
Alexander made an impassioned speech in favor of
taxing the Web in the Senate chambers Monday, stressing that
states will suffer hardships without the tax dollars broadband
will bring. Alexander and Senator George Voinovich (R-Ohio) are
former governors of their respective states and say they want to
give states and municipalities power to tax broadband. The
National League of Cities, an organization representing
municipalities, says local governments would lose as much as $9
billion if the ban becomes permanent.
The question of what to do about VoIP complicates
the issue, because VoIP calls generally travel over broadband,
and there is a furious debate underway whether Web phone calls
should be taxed as a telephone service or not taxed because they
are sent over the Internet as data transmissions.
Proponents of the tax ban in the Senate are
resolute, too. Senator George Allen (R-Va.) and Senator Ron
Wyden (D-Ore.) have led the tax-ban campaign. President Bush,
who urged that broadband remain tax-free, supported their stand
indirectly, this week. "We must not tax broadband access," he
said.
Broadband suppliers have chimed in, of course, on
the side of banning taxes. Broadband service providers--both
telephone companies and cable companies--favor a continuation of
the tax ban, although representatives from both industries have
said they can live with Senator McCain's proposed legislation,
too
Ten states have been taxing broadband right along
because they did so before the initial ban went into effect in
1998.
