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CONGRESS PASSES FINAL LEGISLATION
TO RENEW BAN ON UNFAIR, DISCRIMINATORY INTERNET TAXES
Cox, Allen, Wyden hail House action on
S. 150; bill now heads to the White House for signature into law
November 19, 2004
Washington, DC -- U.S. Senators
Ron Wyden (D-Ore.) and George Allen (R-Va.) and Rep. Chris Cox
(R-Calif.) today hailed passage in the House of Representatives
of the Allen-Wyden Internet Tax Non-Discrimination Act (S. 150).
The House action is the final step in a compromise to end the
stalemate over extension of a ban on multiple and discriminatory
taxation on Internet access and online sales; the legislation
now moves to the White House, where the President has indicated
he will sign the ban, which extends through November 2007, into
law.
S. 150 still 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; changes were made this week to grandfather
in a Wisconsin tax for two years, and grandfather in a Texas utility
tax.
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 Congress 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
the original law,” said Wyden. “Banning unfair and
discriminatory taxes has worked for Internet consumers and for
the web economy. Extending these protections will help more small
businesses grow online and help more of our citizens tap the power
of the web as well.”
“Today, the winners are
the American people. I’m very pleased to see that this measure
was a victory for those of us who stand for freedom, opportunity
and prosperity rather than taxation and burdensome regulations
on the Internet,” said Senator Allen. “The Internet
is one of our country’s greatest innovations for individual
empowerment. Its invention was profoundly transforming and revolutionary
for the dissemination of ideas and thoughts as was the Gutenberg
Press. By passing this bill, we are helping to close the economic
digital divide by promoting equal access to the Internet for all
Americans.”
“The case for allowing
internet access to remain tax free has never been stronger,”
House Policy Committee Chairman Christopher Cox said. “A
tax on the internet would be a tax on working families. Eighty-eight
percent of Americans oppose new Internet access taxes. You might
say this legislation, the Internet Tax Freedom Act and Nondiscrimination
Act and this moratorium are the most popular tax issues in America.
New internet taxes would be highly destructive to the American
economy.”
S. 150 extends the previous
moratorium and makes 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
protocol, 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;
and
· 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.
A substitute amendment from
Commerce Committee Chairman John McCain (R-Ariz.) was accepted
by the Senate in April of this year, making 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 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.
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