House Approves Internet Tax Ban Extension

The U.S. House of Representatives approved legislation Tuesday to extend a moratorium on state Internet access taxes for four years.

The House voted 405-2 to continue the ban, which is scheduled to expire on Nov. 1.

Attention now shifts to the U.S. Senate, where similar legislation has been stalled in the Senate Energy and Commerce Committee over a dispute on whether to extend the ban temporarily or permanently, Reuters reports.

The House vote provoked criticism from some lawmakers, including many Republicans, who said a permanent ban on Internet taxes is needed to spur more investment by broadband service providers, Reuters reports. They complained that House Democratic leaders had blocked a vote on a permanent moratorium.

Bush administration officials also urged that the ban be made permanent.

“Although we recognize that a temporary extension is better than letting the moratorium expire, we are extremely disappointed that the legislation does not extend permanently the moratorium on Internet access taxes …,” Treasury secretary Henry Paulson and commerce secretary Carlos Gutierrez reportedly said in a joint statement before the vote.

But House lawmakers who support the four-year extension said it was pointless to approve a permanent moratorium because it did not have the support needed to pass in the Senate.

The four-year extension is backed by the National Governors Association. It includes a “grandfather” clause that would allow a handful of states to continue imposing Internet taxes—those states that already had a tax enacted in 1998, Reuters reports.

The state tax ban has been in place since 1998, and was last renewed by Congress in 2004 for three years.

Internet service providers say the price of Internet access could rise by as much as 17 percent if the moratorium on state taxes were allowed to expire, Reuters reports.

The service providers had preferred a permanent Internet tax ban, Reuters reports. But with time running out on Tuesday, they said they welcomed the House vote for a four-year extension.