Lawmakers introduce bill to extend Internet tax ban

Three U.S. lawmakers on Tuesday introduced a bill that would permanently extend a ban on Internet-only taxes, including taxes on Internet access.

The legislation would ban three types of taxes that single out the Internet: taxes on Internet access, multiple taxation by two or more states of a product or service bought over the Internet, and taxes that treat Internet purchases differently from other types of sales.

The bill would extend a current Internet tax moratorium that is due to expire in 2007.

Supporters of the Internet Tax Non-Discrimination Act in 2004 attempted to permanently ban what supporters call "discriminatory" Internet taxes, but a group of U.S. senators held up the bill because of concerns that it would stop states from taxing forms of telecommunications transmitted by Internet Protocol (IP), as more telecom providers move traffic to voice over IP [VOIP]. In a compromise, the Senate approved a version of the bill that extended a five-year ban against Internet-only taxes levied by states and local governments.

The new bill is sponsored by Senators Ron Wyden, an Oregon Democrat, and George Allen, a Virginia Republican, and Representative Christopher Cox, a California Republican.

Supporters of the tax ban say access and other Internet taxes would slow U.S. adoption of broadband services, potentially slowing the U.S. economy.

"The Internet Tax Freedom law has created a level playing field, stopping unfair and discriminatory tax schemes that would wall off the Internet to many consumers and make e-commerce impossible for online business owners," Wyden said in a statement. "Internet users and entrepreneurs who breathed a sigh of relief at this law’s extension should have the security of knowing its protections will never go away."

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