Internet tax ban finds more foes

As the bill that would eliminate Internet-only taxes winds its way through Congress, state and local governments are again up in arms. This time, they are crying foul on parts of the legislation that would allow voice calls made over the ‘Net to go untaxed.

The Internet Tax Nondiscrimination Act calls for a ban on taxes that are unique to the Internet such as access taxes. State and local governments are afraid that they will lose revenue if customers realize that calling over the Internet is cheaper than using landlines, which are subject to access charges.

And landline carriers say they will not be able to keep up with the pricing if Internet providers are allowed to offer rates that are tax-free.

According to an IDG News Service report, a multistate tax commission, representing tax officials from 45 states, says state and local governments could lose almost $9 billion a year by 2006 under the current legislation. The reason, the commission says, is because courts could interpret the language to exempt telecommunications carriers from paying taxes on all services offered through Internet technology.

The last time that state and local governments took up arms against the Internet tax ban, they were upset over the potential loss of sales tax revenue. They claimed that any Internet tax that allows e-tailers to avoid state sales tax laws would be detrimental to bricks and mortar stores. The current Act avoids such discussion, making the focus of the legislation on Internet access.

As for your thoughts on imposing taxes on the ‘Net, you’ve clearly stated you are against them.

“No, no, a thousand times no!” says one reader. “I live in a semi-rural county just outside Washington, D.C. I cannot get any type of broadband service except for satellite access, which doesn’t support the VPN access I need for access to corporate servers in NJ and CO. I work from home, and I’m limited to 28.8K bit/sec dial-up. ANYTHING that discourages the deployment of broadband service should be avoided. If I could get cable/DSL/wireless access (at a reasonable price, such as others in metro areas currently enjoy) I’d order it tonight.”

Another reader says taxes would have a terrible impact on the success of the ‘Net. “Any extra cost to a good or a service drives up prices,” he says. “Higher prices have been proven to slow economic growth. Taxes always drive up prices and are a disincentive to buying that good or service.”

And finally, one astute reader put it simply: “If they charge I won’t use it.”

What do you think? Let me know at sgittlen@nww.com