A federal bill to bar state and local taxes on Internet access ran into Senate opposition Friday over concerns the legislation would hamper cash-strapped governments. Lawmakers plan to negotiate further in the hopes of reaching a compromise this week.
The Senate bill snagged on its proposal to define Internet access to include broadband, DSL and wireless. Supporters said such a definition would ensure equal treatment for all Internet access methods, from dialup to cable to DSL. Opponents said such a move could cost state and local governments billions in tax revenue as the telecommunications industry expands its offerings.
Congress originally placed a temporary moratorium on Internet access taxes in 1998 that expired Nov. 1. The House of Representatives voted to make the tax moratorium permanent Sept. 13, and the White House supports the ban.
Supporters of the ban say it would stop states from issuing a raft of new taxes that would threaten the Internet's growth. Detractors complain that telecom companies would use the legislation to skirt paying taxes to state and local governments already operating under severe budget restraints. The bill does not deal with sales taxes on Internet purchases.
Opponents of the permanent ban favor extending the moratorium, with a narrower definition of Internet access, for another two years.