Senate approves Internet tax ban continuation

The U.S. Senate approved Thursday a two-year extension of a ban on new Internet taxes. The legislation, already approved by the U.S. House of Representatives, now goes to President George W. Bush for his consideration.

The Internet Tax Freedom Act, first passed in 1998, lapsed Oct. 21. Bush has already expressed his strong support for the ban, and is expected to quickly sign the bill.

The Senate allowed the ban to expire as several members worked to address state concerns about lost revenue from e-commerce. The Senate is “much closer to an agreement” on legislation about the “extraordinarily controversial” issue of e-commerce sales taxes, Senator John McCain, a Republican from Arizona, said during the floor debate, according to a transcript posted on the Senate’s Web site. But the complexity and diversity of state sales tax systems remains a sticking point.

One member urged the Senate to promptly address those issues. “We should be firm in our resolve that this will not be the first of an endless line of moratorium extensions,” said Senator Max Baucus, a Democrat from Montana, according to the transcript. “I make a strong plea that this be the last time we impose a moratorium without taking the meaningful steps needed to bring interstate tax rules into the 21st century.”

The Internet Tax Freedom Act extension passed after the tabling of an amendment offered by Senators Mike Enzi, a Republican from Wyoming, and Bryon Dorgan, a Democrat from North Dakota. The Enzi-Dorgan amendment would have authorized states to collaborate on an interstate agreement outlining a streamlined sales tax system; once 20 states had joined the pact, the states participating in the agreement would be allowed to require out-of-state sellers to collect sales tax. The amendment failed following a 57 to 43 vote.

The Senate Web site can be reached at