Senate poised to decide on Internet access tax
measure.
Senators will vote this week on whether to
prohibit taxes on high-speed Internet access.
A 5-year-old Internet tax moratorium expired in
November after senators were unable to reach an agreement on an
extension of the ban. The Senate voted 74-11 Monday evening to
push ahead this week and again debate the tax moratorium.
Sen. Ron Wyden, D-Ore., is among those pushing
for a permanent ban on Internet access taxes. Others say local
and state governments need the tax revenues to provide vital
services. Sen. John McCain, R-Ariz., on Monday announced he
would propose legislation that attempts to find a middle ground.
President Bush joined the call for a prohibition
of taxes on fast Internet access, also known as broadband.
"We must not tax broadband access," Bush said
Monday during a speech in Minneapolis. "If you want broadband
access throughout the society, Congress must ban taxes on
access."
Wyden argued that without an extension of the
ban, states and municipalities could overtax an emerging
technology.
"The states and localities essentially see the
Internet as the last cash cow in the pasture," Wyden said on the
Senate floor Monday.
New Internet taxes, Wyden said, would make the
Internet more expensive for customers.
"It's fair to say that if even a modest portion
of the jurisdictions that could impose these taxes chose to do
so, we would be talking about a massive increase in the cost of
Internet access to every consumer in America," Wyden said.
But critics say Wyden's proposal is too broad and
could put a strain on state and local budgets.
Sen. Lamar Alexander, R-Tenn., said a permanent
ban on Internet taxes would cause states and municipalities to
increase taxes on sales and property.
"That's what happens," said Alexander, former
governor of Tennessee. "You lower this tax, you raise that tax."
Alexander sponsored a two-year extension to the
moratorium.
"We can provide the Senate time to consider what
to do about the phenomenon of high-speed Internet access
growth," Alexander said.
Local governments have opposed a permanent ban.
"When the sands are shifting, don't set anything
in stone," said Mary Beth Henry, deputy director of Portland's
Office of Cable Communications and Franchise Management in
Oregon.
Henry said Wyden's bill creates uncertainty about
what services are taxed. That uncertainty, she said, could lead
to lengthy and costly legal disputes.
Under the previous moratorium, states and
localities could tax high-speed access provided over phone
lines, known as digital subscriber lines, but they couldn't tax
broadband service provided over cable-television lines. Wyden's
ban would extend the tax ban to all forms of broadband.
"It just doesn't make sense to me to say, for
example, that cable Internet access ought to be tax free and
then stick it to consumers who choose DSL Internet access,"
Wyden said.
McCain, chairman of the Senate Commerce
Committee, on Monday announced he is proposing a bill that would
extend the Internet tax moratorium for four years. But some
state and local government advocates have cited concerns with
his bill.
