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SENATE APPROVES 4-YEAR EXTENSION
OF BAN ON UNFAIR, DISCRIMINATORY INTERNET TAXES
McCain compromise on Allen-Wyden Internet
Tax Non-Discrimination Act approved in bipartisan vote of 93-3
April 29, 2004
Washington, DC -- U.S. Senators
George Allen (R-Va.), Ron Wyden (D-Ore.) and Commerce Committee
Chairman Sen. John McCain (R-Ariz) today hailed full Senate passage
of the Internet Tax Non-Discrimination Act (S. 150), legislation
extending the ban on multiple and discriminatory taxation on Internet
access and online sales. The legislation bans three types of taxes
that unfairly single out the Internet, including taxes on Internet
access, double taxation (for example, by two or more states) of
a product or service bought over the Internet, and discriminatory
taxes that treat Internet purchases differently from other types
of sales.
The Internet Tax Non-Discrimination
Act extends the original Internet Tax Freedom Act of 1998, authored
by Wyden and Rep. Chris Cox (R-Calif.). The moratorium created
by that legislation and then extended in 2001 expired last November;
today the Senate approved a McCain substitute amendment to the
underlying Allen-Wyden legislation, renewing and refining the
original law and extending its protections for the next four years.
“Today, the winners are
the American people. I’m very pleased to see that this measure
was passed with the bipartisan support of those who stand for
freedom, opportunity, prosperity and more jobs rather than more
taxation and burdensome regulations on the Internet,” Senator
Allen said. “The Internet is one of our country’s
greatest tools and symbols of innovation and individual empowerment.
Its invention was as profoundly transforming and revolutionary
for the dissemination of ideas and thoughts as was the Gutenberg
Press. That is why I’m glad to see the majority of the Senate
voted today with those who want to see the Internet continue to
grow and flourish as a tool for information, opportunity and commerce.
By passing this bill, we are helping to close the economic digital
divide by promoting equal access to the Internet for all Americans.”
“Today the Senate has
preserved the Internet as a thriving conduit of commerce and communication
for all Americans, just as Rep. Cox and I intended when we wrote
this law seven years ago,” said Wyden. “This vote
has protected consumers from a host of new Internet taxes on everything
from web access to e-mail, and has saved fledgling online businesses
from becoming tax collectors for thousands of jurisdictions. The
future of the Internet is brighter and more secure because of
the Senate's action today.”
“This bill will ensure
that consumers will never have to pay a toll when they access
the Information Highway. Plainly and simply, this is a pro-consumer,
pro-innovation, and pro-technology bill. The Internet has started
to become a fixture and core component of modern American life
that has created and continues to generate social and economic
opportunities throughout the United States. This was our goal
then and it continues to be our goal today,” McCain said.
The Senators’ legislation
extends the previous moratorium, making changes to address technological
advances, with the following goals:
· To clarify and update
the definition of Internet access to ensure technological neutrality,
so that the moratorium applies consistently to any type of Internet
access (DSL, dial-up, cable modem or wireless service);
· To ensure that nothing
in the Internet Tax Freedom Act will affect State and local taxation
of voice telecommunications services (including voice-over internet
phone, or VOIP), the application of any federal, State, or local
regulatory fees, or other telecommunications services that are
not purchased or used directly to provide Internet access;
· To ensure that nothing
in the Internet Tax Freedom Act will prevent the imposition or
collection of any fees or charges used to preserve and advance
the universal service program; and
The McCain substitute amendment
to the underlying Allen-Wyden legislation makes additional changes
to address the concerns of a number of states and localities about
the moratorium, including:
· Setting the length
of the moratorium extension at four years;
· Narrowing the definition
of Internet access by excluding traditional telephone service
and carving out Voice Over Internet Protocol (VOIP) to the extent
that such service mimics traditional telephone service;
· Grandfathering in states
that taxed Internet access in 1998 for a four-year period, and
grandfathering in states that currently tax high speed wireline
and wireless Internet access (including those that tax the so-called
“last mile”), but that were not protected by the 1998
grandfather clause, for a two-year period; and
· Incorporating accounting
rules to address bundling, an explicit conclusion of non-transactional
taxes from the Internet tax moratorium, and savings clauses addressing
the regulation of Internet access, universal service and E-911.
S. 150 will now move into a
conference with the House of Representatives to reconcile differences
with legislation already approved there. Today Commerce Committee
Chairman Chris Cannon (R-Utah), who co-authored the House legislation
along with Rep. Cox, praised the Senate’s action.
"Passing the Internet Tax
Nondiscrimination Act is a huge step in transforming the world
of e-commerce," said Congressman Cannon. "In order to
encourage continued growth and innovation, our economy should
remain unfettered by duplicate and discriminatory taxes and regulation.
While a temporary ban is a step in the right direction, we need
clarity on this issue. Permanently eliminating these discriminatory
taxes will not only boost the economy but pave a new path for
Internet broadband deployment."
The president has indicated
that he will sign an extension of the ban on multiple and discriminatory
Internet taxes into law.
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