Senator Proposes Permanent Ban on Internet Access Taxes

Sen. George Allen, R-VA, chairman of the Senate Republican High-Tech Task Force, has introduced legislation that would institute a permanent moratorium on taxation of Internet access.

Allen's bill, S. 777, the Internet Tax Nondiscrimination Act, would make permanent a ban that is set to expire Oct. 21.

Sens. Conrad Burns, R-MT, and John Warner, R-VA, are co-sponsors of the legislation, which also has the support of the Information Technology Association of America, Citizens for a Sound Economy and Americans for Tax Reform.

Allen said that if the bill were passed, it would prevent government from diminishing the promise of opportunity of the Internet.

“In my view, the Internet has the most profound liberating potential since Gutenberg's invention of the printing press, which allowed the mass distribution of ideas, thoughts and information,” Allen said in a statement. “This legislation is a step forward to keeping the Internet free of unfair, discriminatory taxation policies that would impede its future growth as a source of commerce, education and information.”

Allen's bill does not include simplification of the taxation of sales over the Internet, an issue on which there is no broad agreement. Several bills have been introduced during this session of Congress that call for simplification of sales taxes.

For example, S. 288, introduced by Sen. Ron Wyden, D-OR, would extend the current moratorium on the taxing of Internet access but also would require substantial simplification of sales-tax-collection rules before any tax-collecting responsibilities could be imposed on national marketers. A rival Senate bill, S. 512, introduced by Sen. Byron Dorgan, D-ND, calls for an extension of the current Internet tax moratorium and a process that would require interstate sales-tax collection for companies with no nexus, or physical presence, in a state without first requiring substantial simplification of the nation's 7,600 sets of sales-tax rates and rules.

Allen said that Internet tax simplification “ought to be completely separate from the moratorium on access taxes.”

The proposal mirrors legislation introduced in the House of Representatives recently that would extend the moratorium on redundant taxes by six years. Reps. Christopher Cox, R-CA, and Robert Goodlatte and Thomas Davis, both R-VA, are sponsoring the House legislation. Allen said he wants to go further than the House bill and make the moratorium permanent.

The Senate Commerce Committee is scheduled to consider Internet tax legislation as early as Thursday, and most insiders say there is little doubt that lawmakers will extend the moratorium. The question is for how long. Senate negotiators have tentatively agreed on an extension of the moratorium through 2006.

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