Senate Extends Internet Tax Moratorium

The U.S. Senate has voted to extend a moratorium on state and local taxes for Internet access for seven years.

The tax ban was set to expire on Nov. 1. The House passed a four-year extension earlier this month (see House Extends Internet Tax Ban by Four Years). The original Senate bill had also called for a four-year extension, but many legislators wanted the moratorium to become permanent. A vote on an amendment from Sen. John Sununu, R-N.H., calling for a permanent moratorium had been scheduled.

Instead, the original sponsors, Tom Carper, D-Del., and Lamar Alexander, R-Tenn., agreed to a longer extension on the moratorium. "This agreement is a common sense victory both for Internet users and for state and local governments," they said in a joint statement. "It continues the moratorium on Internet taxation, avoids unfunded federal mandates on states and cities, updates the definition of Internet access and allows Congress to revisit the issue after seven years."

Nevertheless, some senators are still pressing for a permanent moratorium. "While I was pleased to help move this legislation, the job's not done yet - we must continue our fight to ban taxes on Internet access permanently," said Sen. Mitch McConnell, R-Ky., in a statement.

Members of the House and Senate will need to meet to decide on the extension period, along with other details, before the bill goes to President Bush to be signed.