House Votes 402-0 to Ban Internet Taxes Seven Years
Voting 402-0, the House passed HR-3678, banning Internet access taxes for seven years -- the third and longest extension since the moratorium’s 1998 adoption. The telecom and high-tech industries lauded the vote, saying it enhances certainty for Internet-dependent businesses. Lawmakers who back a permanent ban voiced pleasure at improvements made last week by the Senate to the bill that the House passed Tuesday. The president is expected to sign the measure. The current moratorium expires Wednesday.
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“This is a cause for celebration,” Rep. Anna Eshoo, D- Calif., said during floor debate. Eshoo pushed a permanent Internet tax ban in a bill (HR-743) co-sponsored by Rep. Robert Goodlatte, R-Va., that drew nearly 240 co-sponsors. “I am still disappointed” that Democratic House leaders didn’t allow amendments in taking up the tax measure Oct. 16, said Goodlatte. A permanent ban would have passed the House, he added. Minority Leader John Boehner, R-Ohio, said the House was “backed into making this decision after passing an inferior measure.”
HR-3678 marks a modest victory for Senate Republicans, who pushed hard for a permanent ban, winning the seven-year extension and some tax tweaks through a procedural move last week. “This seven-year ban nearly doubles the House proposal and further strengthens tax protections for e-mails and instant messaging,” said Sen. John Sununu, R-N.H., the seven- year amendment’s sponsor. “I will continue to fight for a permanent ban on access taxes, but this is a strong step forward.”
Business hailed House passage. “This is an important and critical step,” CTIA said. “It means that broadband services will continue to be affordable for all Americans.” USTelecom said the bill “clearly sends the right message that consumers should never be taxed simply for accessing the Internet.” AT&T, Verizon, the National Association of Manufacturers and the Don’t Tax Our Web coalition, representing the high-tech and Internet industries, praised the House action.
The bill removes what some called an ambiguity in that law that could allow taxation of “incidental” services, such as e-mail, instant messaging and electronic storage capacity. Those services would be protected from taxes under the bill, but fee-based voice, audio or video programming services that use the Internet wouldn’t. Revenue from Internet services in states that have adopted gross receipts taxes in place of traditional corporate income taxes would be tax exempt -- one of the bill’s more controversial provisions.
The bill also would phase out “grandfather” provisions protecting established state taxes on Internet access. This is a “use it or lose it” provision, Smith said. The bill would eliminate grandfathering of states and municipalities that haven’t not collected such taxes in the past two years. That means Tennessee, Connecticut and Washington, D.C., Senate staffers said.