House Undecided on Senate’s 7-Year Internet Tax Ban
A late night Senate deal to extend the Internet tax moratorium for seven years faces an uncertain fate in the House, but the bill (HR-3678) is still likely to be considered next week either in the Judiciary Committee or on the House floor. House leaders hadn’t decided by our deadline how many years to extend the moratorium, a Democratic aide said Friday. Many Senate and industry sources said they expected the seven-year deal, which includes some changes to tax provisions requested by Democrats, to pass in the House despite reservations by some House members.
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Rep. Anna Eshoo, D-Calif., urged Speaker Nancy Pelosi to adopt the Senate’s seven-year proposal in a letter she sent to the speaker’s office Friday. Pelosi favors a permanent ban, and introduced a bill (HR-743) that now has 240 co- sponsors. A seven-year ban would mean the measure would next come up for consideration in a non-election year, as opposed to the four-year extension that could create the same political dynamics now facing lawmakers.
House Judiciary Committee Chairman John Conyers, D- Mich., hadn’t weighed in at our deadline, Hill and industry sources said Friday. House Minority Leader John Boehner, R- Ohio, urged the House to bring the Senate’s proposal to the floor for a vote. “The bill passed by the Senate is far superior to the measure advanced by the House two weeks ago,” Boehner said.
“We need to make a decision quickly,” Rep. Robert Goodlatte, R-Va., told us. States are ready to impose Internet taxes as soon as the moratorium expires, he said. Goodlatte proposed an amendment in Judiciary Committee markup for a permanent ban, and when it failed tried for an eight- year and then a six-year ban (CD Oct11 p4). They, too, were rejected. Goodlatte said House leadership should call up the Senate-amended HR-3678 for a vote as soon as possible next week. In remarks Friday, President Bush urged congressional action on the Internet tax moratorium.
“There is strong, bipartisan support for my legislation -- the longest extension of a ban ever considered by Congress, and I hope that the House acts before next Thursday and sends the bill to the President,” said Sen. John Sununu, R-N.H., who brokered the seven-year deal extending the moratorium late Thursday in negotiations off the Senate floor. Sununu began his push earlier in the day by offering an amendment to the Amtrak authorization bill. Sununu’s amendment sought a permanent extension; he refused to back down when Sen. Thomas Carper, D-Del., tried to persuade him to accept a six-year extension (CD Oct 26 p2)
“There was a strong, bipartisan effort spearheaded by Senate leaders Reid and McConnell,” said Broderick Johnson, executive director of the Don’t Tax Our Web coalition, which represents the high-tech and communications industries. “With the expiration fast approaching next week, we urge the House to act on the Senate bill.” Sununu, Carper and Sens. Ron Wyden, D-Ore., and John McCain, R-Ariz., and Senate Commerce Committee leaders, worked out a package that included some tax provision changes Wyden sought as well as the seven-year extension. “I will continue the fight for a permanent ban, but in the meantime, great strides for Internet tax freedom have been made this week,” Sununu said.
“We have seen that when state and local authorities tax new technology services, taxes can be as much as 20 percent of a customer’s bill,” McCain said. “We want to ensure that the Internet is not taxes as heavily as cell phones, or alcohol and cigarettes for that matter,” McCain said. Industry sources said the Senate action helped propel the issue forward in time to act before the ban expires Nov. 1.
The Senate deal contains language to assuage concerns raised by Wyden, who objected to provisions he said would open the door to taxes on services that are now tax exempt. The new bill would close that loophole by adding language ensuring that companies providing “stand-alone” Internet services such as email would be exempt from tax. This is the third time that Congress is considering an extension to the moratorium, which first was imposed in 1998.
Thursday’s action surprised even seasoned lobbyists, many of whom expected the Senate to hold firm for the four- year ban in the House bill, and to block Sununu’s amendment mandating a permanent extension. The move followed legislative maneuvers that could have thwarted the Amtrak bill’s progress, and some speculated that was why Majority Leader Harry Reid, D-Nev., sectioned off the package for a separate vote.
Industries widely praised the Senate deal in statements released Friday. “We appreciate the Senate’s actions… extending the moratorium for the longest time period in the history of the ban and we strongly urge the House and Senate to send this legislation quickly to the President for his signature,” said USTelecom President Walter McCormick. The National Association of Manufacturers urged House and Senate negotiations to hammer out a final compromise before the ban expires.