House Permanently Extends Internet Tax Moratorium

by Mike Godfrey, for LawAndTax-News.com, Washington

19 September 2003

The US House of Representatives on Wednesday passed a bill permanently extending the moratorium on taxing internet access, and clarifying that all methods of accessing the web are exempt from taxation.

The move to extend the ban, which was due to expire on November 1, was welcomed by Treasury Secretary John Snow and Commerce Secretary Don Evans. In a joint statement released on Wednesday, the two men observed that:

'Keeping the internet free of multiple and discriminatory taxes will help create an environment for innovation and will help ensure that electronic commerce remains a vital, and growing, part of our economy.' They continued:

'The Departments of Commerce and Treasury will continue to pursue this issue to make sure a permanent moratorium is available for President Bush to sign by the November 1 deadline.'

However, the move is likely to have come as something of a blow to the nine states which currently impose a tax on internet connections, and which, according to recent estimates from the National Conference of State Legislatures, stand to lose between $80 million and $120 million in revenue per year.

A related bill in the Senate would give the affected state authorities three years to phase the levy out and find other sources of revenue to plug the gap.

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