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Proposed bill to extend ban on Internet tax

April 19, 2005

Three U.S. lawmakers want to introduce a new bill that would permanently extend a ban on Internet-only taxes, including taxes on Internet access.

The legislation would ban three types of taxes that single out the Internet: taxes on Internet access, duplicate taxation by two or more states on a product or service bought over the Internet, and taxes that treat Internet purchases differently from other types of sales.

The bill would extend a current Internet tax moratorium that is due to expire in 2007.

Supporters of the Internet Tax Non-Discrimination Act last year attempted to permanently ban what supporters call "discriminatory" Internet taxes.

But a group of U.S. senators held up that bill over fears that it would stop states from taxing telecommunications transmitted via Internet protocol, as more telecommunications providers move traffic to voice over IP. In a compromise, the Senate approved a version of the bill that extended a five-year ban against Internet-only taxes levied by states and local governments.

The new bill is sponsored by Sens. Ron Wyden (D-Ore.) and George Allen (R-Va.), and Rep. Christopher Cox (R-Calif.).

Supporters of the tax ban say access and other Internet taxes would hinder U.S. adoption of broadband services, potentially slowing the U.S. economy.

"The Internet Tax Freedom law has created a level playing field, stopping unfair and discriminatory tax schemes that would wall off the Internet to many consumers and make e-commerce impossible for online business owners," Wyden said in a statement.

"Internet users and entrepreneurs who breathed a sigh of relief at this law's extension should have the security of knowing its protections will never go away."

Source: Computer World

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