FRIST SETS WEEK OF MAY 3 FOR MORATORIUM DEBATE, VOTE
A debate and vote on reviving the moratorium on discriminatory Internet taxes and access taxes likely will be held the week of May 3, Senate Majority Leader Frist (R- Tenn.) said Thurs. Several Hill sources cautioned Thurs. that many other events in the Senate could postpone action further, however. Frist also made clear in a Q&A with the U.S. Chamber of Commerce he would like to see compromise language reach the floor.
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Frist last fall attempted to have a floor vote held on S-150, a bill by Sens. Allen (R-Va.) and Wyden (D-Ore.) to make the moratorium permanent and ensure DSL wasn’t taxed as a telecom service. That vote was thwarted, however, when Sens. Alexander (R-Tenn.) and Carper (D-Del.) planned to introduce an amendment with a differing definition of Internet access and a limited extension of the moratorium rather than a permanent one. Frist pulled S-150 to permit negotiations between the 2 sides. Frist’s compromise met no takers -- prompting Frist to say on the Senate floor that “this was the first, last and only moment when the various parties were able to reach agreement with respect to anything having to do with taxing the Internet.”
The sides are still talking, said a spokeswoman for Alexander. Allen and Alexander have met, and their staffs have held meetings. At a Heritage Foundation event recently Allen offered to include in a manager’s amendment language making clear VoIP wasn’t involved; Alexander’s spokeswoman said the 2 senators had used that as a “starting point” for further talks. Frist said issues like VoIP weren’t considered 2 years ago when the moratorium was renewed. But no agreement has been reached on 3 volatile areas of disagreement: The moratorium’s duration, whether states currently taxing should be grandfathered, and defining access.
The only place Wyden is willing to negotiate “is the length of the moratorium,” said his spokeswoman, although he still believes it should be permanent. She said Wyden had heard “no compelling argument” to permit any grandfathering or alter the definition of Internet access. Carper’s spokesman held out hope more talks would yield compromises. “We stand willing to discuss this bill and meet every day with Senators Allen and Wyden if necessary in order to get an agreement we all can live with. We still feel the best way to move this bill is for both sides to come together and work out something before we go to the floor.” He wouldn’t say where Carper was willing to negotiate.
S-150 eliminates taxes grandfathered in the past 2 moratoria from 1998 and 2001, and includes DSL as access not subject to taxation. The moratorium expired Nov. 1. Alexander’s S-2084 preserves the original grandfathered states, plus the several now taxing DSL. It also contains access language that would permit taxation of Internet backbone traffic. Frist emphasized the issue isn’t whether to tax connection to the Internet but “where along the backbone do you allow taxation.”
Frist said he anticipated 2 days of “debate and discussion” on S-150 if it came to the floor the week of May 3 without a compromise in place. Alexander’s spokeswoman said it was reasonable to assume that her boss would seek to amend S-150 with language from S-2084. Frist didn’t say how he'd like the problem resolved. He did say “I think a compromise can be put on the table,” but added, “we're not there yet.” Frist said the bill was “frustrating” because it once was considered a “3 or 4 minute bill,” but became a controversial issue after current governors and former governors now in the Senate raised concerns. He didn’t name them, but the ex-governors include Alexander and Carper, as well as Sens. Graham (D-Cal.) and Voinovich (R-O.). Alexander’s spokesman said her boss appreciated the flexibility his fellow Tennessean had given him in working for alternative language on S-150.
Frist also addressed separate efforts to pass legislation to streamline sales taxes so taxes can be collected on remote sales. Twenty states have enacted a streamlined sales tax proposal, with several others considering implementation. Mandating collection by remote sellers will require an act of Congress to overturn the Supreme Court’s Quill v. N.D. decision. The Senate has a bill before it by Sens. Enzi (R-Wyo.) and Dorgan (D-N.D.), S- 1736, to do just that. The bill has 19 cosponsors, including Alexander, Carper, Graham and Voinovich. While not formally endorsing the bill, Frist said “if you buy running shoes on the Internet, some people say that there should be some form of streamlining to address that… The states are doing pretty well with that.”