Grant Gross
Senior Writer

Seven-year Internet tax ban heads to President

news
Oct 30, 20073 mins

Lawmakers expect extension of Internet tax ban, which has been in effect in United States since 1998, to be easily approved by President Bush

The U.S. House of Representatives has approved a seven-year extension to an Internet tax ban, the final step before the legislation heads to President George Bush to be signed into law.

The House on Tuesday approved the Senate version of the Internet tax moratorium, which would ban Internet-only taxes such as access taxes for seven years. The current ban has been in effect since 1998, except for a lapse during most of 2004.

Many supporters of the moratorium had called for a permanent ban, but some lawmakers and state and local government groups had raised concerns that a permanent ban would hurt state and local governments’ ability to raise money. Opponents of a permanent ban also questioned if telecom carriers would try to expand the ban to services such as VoIP.

Bush is expected to sign the legislation. He has supported an Internet tax ban, and he signed the last extension, passed by Congress in late 2004.

The ban on Internet taxes expires Thursday. Lawmakers in favor of extending the ban say it’s important to promote the adoption of broadband, which, in turn, creates jobs and improves the U.S. economy.

Earlier this month, the House passed a four-year extension. After the Senate passed the seven-year ban last Thursday, the House on Tuesday voted 402-0 for the seven-year ban.

The tax moratorium does not ban sales taxes online. It applies only to taxes that would be unique to the Internet, including taxes on Internet access.

Sen. John Sununu, a New Hampshire Republican, praised the House for passing the seven-year ban, which he cosponsored. The Senate version of the bill, awkwardly named the Internet Tax Freedom Act Amendments Act, specifically exempts e-mail and instant messaging from taxes after some groups raised concerns that the House version of the bill could allow taxes on those services.

“It’s great to see Congress act on time for a change and take an enormous step for Internet tax freedom — banning access taxes and protecting e-mails and instant messaging for the next seven years,” Sununu said in a statement. “I will continue to fight for a permanent ban on access taxes, but this is a strong step forward. Taxing the Internet is wrong for consumers and wrong for the economy.”

The United States Telecom Association, a trade group, and Verizon Communications both praised Congress for passing the extension.

“Broadband access is now a crucial driver of America’s economy, and this moratorium extension will ensure continued investment and growth in the broadband marketplace,” Peter Davidson, Verizon’s senior vice president of federal government relations, said in a statement. “This is good for consumers and businesses across the country.”

Grant Gross

Grant Gross, a senior writer at CIO, is a long-time IT journalist who has focused on AI, enterprise technology, and tech policy. He previously served as Washington, D.C., correspondent and later senior editor at IDG News Service. Earlier in his career, he was managing editor at Linux.com and news editor at tech careers site Techies.com. As a tech policy expert, he has appeared on C-SPAN and the giant NTN24 Spanish-language cable news network. In the distant past, he worked as a reporter and editor at newspapers in Minnesota and the Dakotas. A finalist for Best Range of Work by a Single Author for both the Eddie Awards and the Neal Awards, Grant was recently recognized with an ASBPE Regional Silver award for his article “Agentic AI: Decisive, operational AI arrives in business.”

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