“Preventing the taxation of Internet access will help sustain an environment for innovation, ensure that consumers continue to have affordable access to the Internet, especially high-speed Internet, and strengthen the foundations of electronic commerce as a vital and growing part of our economy,” they said.
The officials’ statement is likely geared toward lighting a fire under a U.S. Senate committee scheduled to vote Thursday on a bill that would merely extend the tax ban for four more years, as opposed to making it everlasting. President Bush in the past has also advocated for the tax halt.
If the moratorium is allowed to expire on November 1, states would be allowed to levy taxes on digital subscriber line, cable modem, wireless and even BlackBerry-type data services. They would also be free to charge different tax rates for goods sold on the Internet and goods sold offline. It’s unclear how many states would have immediate plans to enact such laws, though, if the ban lapses.
Because none of the pending permanent tax ban bills has been called up for a vote in the Senate Commerce Committee on Thursday, a temporary extension appears more likely. That approach represents a compromise of sorts with state and local officials who have balked at the idea of never having the opportunity to revisit the potential for Internet access taxes as a revenue source. (Some states are still allowed to levy such fees because of “grandfather” provisions in existing law.)