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Max Hopper
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Congress Reinstates Internet Tax Ban<!--EZCODE BR START--><!--EZCODE BR END-->Fri Nov 19, 2004 03:39 PM ET<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->By Andy Sullivan<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->WASHINGTON (Reuters) - The U.S. Congress on Friday reinstated a ban on Internet access taxes after the House of Representatives agreed to extend it for another three years rather than make it permanent.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->As Congress neared adjournment for the year, the House passed by voice vote a Senate bill that prevents state and local governments from taxing the monthly fees Internet providers like EarthLink Inc. (ELNK.O: Quote, Profile, Research) charge their customers.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->The Bush administration is expected to sign it into law.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->The ban, in place since 1998, expired one year ago amid dire predictions that tax-happy states could choke the growth of the Internet.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->The House voted last year to make the moratorium permanent, ensure that it applied to high-speed "broadband" service and phase out existing state taxes.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->But the Senate let the ban lapse after some lawmakers said it would require states to raise taxes in other areas to make up for the millions of dollars they would lose as telephone and other services migrate to the Internet.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->The measure would also allow states to tax online phone service, but the Federal Communications Commission recently ruled that only the federal government has that authority.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->The Senate passed a compromise bill in April that would reimpose the ban until November 2007, a measure resisted by House Republicans until the final days of the session.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->"Without any action by this Congress ... the Internet economy and its participants are more vulnerable, even if we must act on a weaker bill," said Wisconsin Republican Rep. Jim Sensenbrenner, who won a concession requiring his state to phase out its existing access tax in two years.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->North Carolina Democratic Rep. Mel Watt said he would help Sensenbrenner make the ban permanent in the next session if the Republican would allow states to tax online sales.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->"We will deal with both of those issues and consider them in the next Congress," Sensenbrenner said.<!--EZCODE BR START--><!--EZCODE BR END--><!--EZCODE BR START--><!--EZCODE BR END-->© Reuters 2004. All Rights Reserved.