Senate Commerce Committee To Decide Fate Of Internet Tax Moratorium

The Senate Commerce Committee is poised to extend the internet tax moratorium by the end of next week. The moratorium prevents states and localities from taxing internet access, but will expire on November 1 unless Congress acts. There are two competing proposals that pit state legislatures and the National Governors Association against Google and Verizon.

State legislatures and Governors have spent the past decade salivating over the potential revenues that could come with taxing internet access, estimated to be worth approximately $120 million. Two former Governors, Senators Carper (D-DE) and Alexander (R-TN), introduced a proposal in May, S. 1453, that would extend the ban for four years, but would permit states to collect taxes on internet access levied before the imposition of the moratorium in 1998.

Competing against the Carper-Alexander proposal is S. 156, introduced by Senator Ron Wyden (D-OR). The Wyden proposal would extend the tax moratorium indefinitely, and has attracted almost twenty conservative Republican co-sponsors, along with John Kerry (D-MA) and Patrick Leahy (D-VT). Google and Verizon also support the measure.

We prefer a permanent ban because we don’t want telecoms raising the cost of our already expensive internet access by almost 20%. Such a tax would silently tarnish every great deal unearthed by the internet. Besides, if it ever became necessary, Congress could easily reverse the ban and let states feast upon the succulent tax revenue.

Congressional staffers will spend the next week mediating an agreement between the competing camps. Tune in on Thursday afternoon to see which side will prevail.

As deadline looms, Senate still debating fate of Internet tax moratorium [Ars Technica]
S. 1453 – Internet Tax Freedom Act (ITFA) Extension Act of 2007 [THOMAS]
S.156 – Permanent Internet Tax Freedom Act of 2007 [THOMAS]
(Photo: Phillip)

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  1. CoffeeAddict says:

    There should be a permanent mortorium on this internet tax and should be one that can never be reversed. I mean 120 Million won’t make much difference to the coffers of senators etc, but it will piss off the regular people who use the internet everyday to make a living.

  2. doctor_cos wants you to remain calm says:

    This is Consumerist, so someone will obviously have to post how this tax will be good for us.
    Bad enough states can collect ‘sales’ taxes for something that they had nothing to do with the sale of, other than the fact that I live here, which I already pay taxes for.

  3. Major-General says:

    @doctor_cos: Ahh, those so-called “use” taxes. Yeah, like I’m going to pay California extra money for something that I bought while in Kansas. Of course, if California will issue me rebates on things I buy in Oklahoma, then we’ll talk.

  4. StevieD says:

    What is wrong with taxes? Teacher salaries, roads and bridges, puplic hospitals et al are all funded by taxes. Yes the government is sure wasteful with the money that I send them, and I sure would like to stop funding that stupid project my governor just announced, but taxes are what pay for those and many more projects.

    Do I want a “new” tax? No. But if this tax already does exist. And if this tax can offset another tax that the government is going to create, then why not let this tax be activated?

    As to the regular people that make a living from the internet, I pay a whole heap of taxes to operate my storefront and warehouse, why can’t a person making a buck or two from the internet be required to pay a few pennies taxes as a tribute for the source of their revenue?

    Yep, mom and dad are going to be pissed for having to pay a couple pennies in internet taxes, but that is nothing compared to the scream that dad is going to make when his property tax is increased by several thousand dollars because of the re-appraisal project that is being currently performed.

    By the way, $120 million in total estimated tax revenue, assuming 60 million internet accounts, works out to be about $0.17 per month per user in an internet tax.

  5. doctor_cos wants you to remain calm says:

    @StevieD: We have a winner!!!
    Don’t ask questions you don’t want the answer to…what is wrong with taxes?
    If my tax money went to roads and bridges and schools, that would be wonderful, but NOOO. My tax money goes to Israel, Halliburton, Fatherland Security, bailing out airlines and banks, protecting the interests of oil companies and other big businesses while they themselves evade paying taxes, screwing over the environment, etc. etc.

    But let’s pay for free speech (on the internet) so the government can use the money to quash free speech (you can’t wear that t-shirt here, you can’t have a peaceful protest there, you can’t say that on the radio, etc.)

    Does that answer your question or are you just going to reply about liberal left-wing kookiness to dismiss the real truth that conflicts with your Faux-news version of reality?

    If I could determine where my taxes were spent, not “my” representatives, I would feel a lot less violated come April 15.

  6. Amelie says:

    @ DOCTOR_COS
    Ooh, you just made my day.

  7. Dancing Milkcarton says:

    @doctor_cos: Wow – I was very interested in what was coming after Stevie wrote his pro-taxes manifesto, until I actually read it.

    While I don’t agree with Stevie at all (we are taxed too much) – your weak reply was even… well, weaker.

    I’m not a fan of any cable news network – including Fox News – but when one invokes the term ‘Faux News’ it automatically discredits your unoriginal thoughts.

    Bottom line – less taxes: always good (even if it’s only $0.17 a month), dumbass hippie screeds: always bad.

    BTW, they are ‘your’ representatives – whether you like it or not.

  8. doctor_cos wants you to remain calm says:

    @bitfactory: “Dumbass hippie screeds”??
    Well, if you have no problem with where the tax money goes, you can pay my share as well and then we’ll both be happier and think ourselves better people. Although the part about free speech is still off limits.

  9. doctor_cos wants you to remain calm says:

    And when we throw out the Diebold machines and I can actually vote again with confidence, then you can call them my representatives.

  10. Geekybiker says:

    If it was a few pennies, who cares. Trouble is, have you looked at the taxes and fees on a land line lately? They can easily double (or more!) the cost of basic service. That $10 DSL from ATT suddenly will become a $30 line with the state telecom taxes on it.