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Senate Approves Four Year Extension To Ban On Internet Tax

by Leroy Baker, Tax-News.com, New York

19 November 2004


A four-year extension to the moratorium on the taxation of internet access in the United States is expected to receive imminent Congressional approval after the Senate voted unanimously this week to extend the ban.

Under the legislation, local and state governments would be restricted from levying taxes on internet access services, including broadband and wireless services.

However, other services such as internet mobile phones will remain outside of the legislation’s remit, as will the sale of goods and services made over the internet.

The previous ban on internet access taxes, passed in 1998, expired in November 2003, and attempts to renew the moratorium have been stalled in Congress since April. However, lawmakers expect the House to also approve the new measure before the bill is sent to President Bush for signature by the end of the week.

Expanded provisions covering high speed broadband services had initially sparked fears from local officials that their ability to collect taxes at the local level will be severely curtailed, although a last minute provision allowing them to continue assessing existing telephone taxes has assuaged these fears somewhat.

Welcoming the Senate’s approval, Sen. George Allen (R., Va.), who co-sponsored the legislation noted: "I'm glad to see the majority of Congress stands with those who want to see the Internet continue to grow and flourish as a tool for information, opportunity, prosperity and commerce."

A comprehensive report describing the stage of development of e-commerce in most major offshore jurisdictions, including their legislative regimes, is available in the Tax News Reports Shop at http://www.tax-news.com/reportshop/

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