Ban On Internet Access Taxes Poised For ApprovalBan On Internet Access Taxes Poised For Approval

Legislation to temporarily ban taxing Internet access is poised for approval this week after the U.S. Senate approved the legislation and worked out wording acceptable to Congress. If approved as expected, the legislation could go by week's end to President Bush, who has said he will sign it.

The legislation came about after several months hammering out details by opponents and proponents of the bill, S. 150.

"There was wide support for the ban," said Jon Abolins, senior vice president, operations, for Massachusetts-based tax compliance system provider Taxware. "There was never any doubt that Congress would pass it. It was a question of what form it would take." Abolins has testified before the House Judiciary Subcommittee on Commercial and Administrative Law on matters pertaining to tax simplification and sales tax technology.

Before the legislation advanced, many states and cities " some of which were already taxing Web access " expressed concern that a source of revenue would be denied to them. One vocal opponent of the ban, Sen. Lamar Alexander (R-Tenn.), labored to work out a compromise that led to Wednesday's passage of the bill in the Senate. He was joined by Sen. Tom Carper (D-Del.) in developing the compromise legislation.

"The original version of the bill would have amounted to a big tax giveaway to the telecommunications industry while doing substantial harm to the revenue base of state and local governments." the senators said in a joint statement.

Alexander and Carper, working also with other senators including Sen. Ron Wyden (D.Ore.), worked out compromise legislation. Wyden led the battle to keep the ban in place. Alexander observed that the ban is not permanent " it will be in effect for four years. Second, it permits some states and cities already collecting taxes on Web access to continue taxing.

"Most importantly (it) makes clear that states and cities can continue to collect taxes on telephone services, even if telephone calls are made over the Internet," the federal lawmakers wrote.

The four-year ban will likely give Congress and various consumer and business interests time to sort out whether they will want to continue the ban in the future, Abolins said.

The previous ban expired last November, and unrest was growing among states and cities, which wanted to tax Internet access, Abolins said. President Bush has said he favors a permanent ban on Internet taxes.