Internet tax debate continues – tax or no tax
As a federal ban on discriminatory and access taxes on the Internet approaches a Nov. 1 expiration date, Congress is once again embroiled in a question that comes up every three or four years: To what degree does the Internet merit special federal protection from state and local tax collectors?
The states are pressing for a narrower definition of Internet access, fearing that if the definition is too broad they will be unable to tax traditional telecommunications and video services that are bundled with Internet access. VoIP was explicitly exempted when Congress last extended the ban, and the states are concerned that non-access related emerging services, such as IP TV, could end up tax-free if service providers bundle them with connectivity. Two bills pending in the House would make the ban permanent, but questions have arisen whether the Internet is sufficiently mature to thrive without eternal federal protection. A pending Senate bill would extend the ban for another four years.
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