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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