NGA Calls For Temporary Net Tax Ban

by Mike Godfrey, Tax-News.com, Washington

25 February 2004

The National Governors Association (NGA) has reiterated calls for US lawmakers to extend the moratorium on internet access taxes on a temporary basis, according to reports in the national media.

In addition, the NGA is reportedly lobbying to keep a loophole which allows state authorities that levied an access tax before the recently expired moratorium was put in place to continue to do so.

Legislation passed by the House of Representatives and the Senate Commerce and Science Committee eliminates the "grandfathering" provision which protects states already imposing a tax on internet access, extends the definition of access to include broadband and other high speed connections, and makes the moratorium a permanent fixture.

However, state authorities are concerned that the proposed legislation is too broad in scope, and will result in large revenue losses for state and local authorities if put in place.

In a letter to Senate leaders written prior to the November expiry of the net tax ban, Governors Brad Henry (D-OK) and Michael Rounds (R-SD) suggested that:

"Given the rapidly changing technology in the communications industry, and with little time to negotiate an appropriate definition of Internet access, we encourage you to support a simple, temporary extension of current law to allow Congress, industry, and state and local governments time to fashion a permanent moratorium that is thoughtful and fair."

Reporting on the winter meeting of the NGA, which commenced at the weekend, Internetnews.com revealed that the assembled governors had reiterated their plea to Congressional lawmakers, further observing that: "They are mobilizing, so far very successfully, to keep the next moratorium brief in length and narrow in definition".

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