House Panel Approves Permanent Internet Tax Ban

Washington, D.C.

A U.S. House of Representatives subcommittee voted May 22 to make permanent a ban on Internet-specific taxes, shrugging off attempts to link it with a more controversial effort to allow online sales taxes.

The Subcommittee on Commercial and Administrative Law passed a measure by voice vote that would make permanent a ban on “multiple and discriminatory” taxes on Internet access fees and online traffic due to expire in November, according to Reuters.

Senior Bush administration officials during the week of the subcommittee vote urged Congress to extend the ban before it expires, saying new taxes could slow the roll-out of high-speed Internet access.

The ban does not address online sales taxes, which are currently prohibited under a 1992 Supreme Court decision that forbids states from taxing catalog, telephone and other remote sales.

Cash-strapped states, “brick and mortar” retailers and other advocates of online sales taxes have sought to tie the two issues together, hoping to link the politically popular moratorium with the more controversial right to impose sales taxes on the Web.

Subcommittee Chairman Rep. Chris Cannon said the two issues should be dealt with separately. “I think we’ve come to a point where we understand what we’re doing with the moratorium, and we want to make it permanent,” the Utah Republican said.

Cannon said his committee would hold a hearing to examine state efforts to simplify their sales-tax codes, which would make collection of such taxes less difficult.

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