WATPA: FW: 'Net Tax Ban Renewal Hopes Fade for 2003

From: Norm Jacknis <norm@jacknis.com>
Date: Fri Dec 05 2003 - 18:30:41 EST

A follow up to Chris Candreva's earlier posting.


'Net Tax Ban Renewal Hopes Fade for 2003
By Roy Mark <mailto:rmark@jupitermedia.com>
December 5, 2003

WASHINGTON -- Barring a last-minute compromise, the movement to revive the
Internet access tax ban that expired on November 1 is all but dead for 2003.
U.S. Senate leaders remain divided over the duration of the next moratorium
and the definitions of Internet access but, despite strong support in
Congress to extend the ban either temporarily or permanently, the
disagreements are likely to delay any legislation on the measure until
mid-January at the earliest.
On September 1, the House overwhelmingly approved a permanent ban
<http://dc.internet.com/news/article.php/3079091> on Internet connection
taxes. Similar legislation was pushed through
<http://dc.internet.com/news/article.php/2242971> the Senate Commerce
Committee in July by Senators Ron Wyden, D-Ore., and George Allen, R-Va. but
the bill later ran into opposition from Tennessee Republican Lamar
Alexander, who expressed concern about the measure's financial impact on the
The bills also phase out the grandfather clause in the original moratorium
that preserves state and local taxes on Internet access imposed and actually
enforced prior to October 1, 1998. Ten states (Hawaii, New Hampshire, New
Mexico, North Dakota, Ohio, South Dakota, Tennessee, Texas, Washington and
Wisconsin) are currently collecting taxes
<http://dc.internet.com/news/article.php/3082891> of approximately $80-$120
million annually under the grandfather clause provision.
Alexander has countered with an amendment to extend the language of the
lapsed moratorium for another two years, preserving the grandfather clause
for his and other exempted states and tweaking the language to cover DSL
connections. Wyden and Allen offered a compromise package that keeps the
expanded definitions but limits the duration of a new moratorium to 3-5
Unable to reach a compromise, neither side plans to ask for a floor vote
when Congress reconvenes next week.
"Sen. Alexander has already done a lot of compromising on this bill," Alexia
Pope, Alexander's press secretary, told internetnews.com. "He went all the
way from not wanting a moratorium at all to this compromise to extend the
current moratorium."
Pope said there is "always a chance" of a compromise but, at this stage,
there is no agreement.
"Sen. Wyden would very much like to see a bill, the sooner the better, but
it appears to be a task for next year," Carol Guthrie, communications
director for Wyden, said. "We don't expect any action before the end of the
Since the ban expired, all Internet access connections are currently subject
to taxation although most state legislatures will not be back in session
until mid-January or February. Even then, states will be hesitant to enact a
tax with federal legislation pending. When the first three-year ban expired
in 2001, the moratorium lapsed for a brief period before Congress extended
it for another two years.
"What we are proposing is a two-year extension of the current law with one
exception: level the playing field between the phone companies and the cable
companies," Alexander said during the November floor debate. "This short
term solution allows us to craft careful changes in a rapidly changing
technological world."
Sen. Fritz Hollings, D-S.C., said: "Under the present (proposed) language,
the bill extends the exemption not just to the last connection to the
consumer but all the way down the pipeline. That is not the intent of
Congress at all. We've invaded the taxing authority of the states and that's
not right."
Another Alexander ally, New Jersey Democratic Sen. Frank Lautenberg, added,
"This amounts to another corporate giveaway. I would support a ban, but only
a temporary one. I would not and can not support a moratorium that is
permanent based on such a vague definition of what Internet access is."
Wyden says the Alexander amendment would make it easier for states to tax
wireless connections and other types of Internet access never contemplated
by the original 1998 ban on access taxes.
"Senator Allen and I have done everything but have a skywriter to write over
the capital building, telecommunications services that are taxed today can
and should be taxed in the future," Wyden stressed to his colleagues.
Wyden sponsored the original moratorium in 1998 and its extension for
another two years in 2001.
Copyright 2003 Jupitermedia Corporation
Received on Fri Dec 5 18:43:14 2003

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