Washington -- Ending a year-long deadlock on the issue of whether to extend a tax-free ban on Internet access, House lawmakers agreed to replace a more far ranging tax ban with S. 150, a milder version offered up by their Senate colleagues that extends the moratorium on Internet access taxes as well as certain taxes on e-commerce until 2007.
Back in April, prompted by concerns raised by various state and local governments who bemoaned the potential of billions in lost tax revenue as voice communication continues online, the Senate passed S. 150, but has since made several revisions to that measure.
The initial three-year moratorium on Internet taxes, which blocked individual states from levying taxes on the monthly charges of online service providers, expired last November.
The controversy on Internet taxes spurred pro-consumer groups to argue that tax-free status would both encourage a higher frequency of e-commerce and higher conversions to the oft-advertised high speed Internet service. However, some representatives have argued that their state coffers were being deprived of a significant revenue stream. The initial laws on Internet taxes were drafted prior to the advent of high-speed Internet telephone access or DSL. Subsequently, certain states had the power to collect taxes on DSL service. However, similar taxes were not being collected for online service over cable lines.
