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House Votes to Extend Internet Tax Moratorium

The House on Tuesday overwhelmingly approved a four-year extension of a moratorium on state and local taxes on Internet access, despite widespread support in both parties for a permanent ban.

The tax ban, first passed in 1998, is set to expire on Nov. 1. The extension exempts some states that approved taxes prior to the original enactment.

The vote was 405-2.

"This bill is pro consumer, pro innovation and pro technology," said Rep. Mel Watt, D-N.C., one of the bill's sponsors.

The bill to extend the tax break fell short of the permanent exemption that many lawmakers favor. A bill to make the moratorium permanent has 238 House co-sponsors, more than a majority.

Rep. Lamar Smith, R-Texas, said a permanent ban would ensure that businesses would continue to invest in the Internet and keep access affordable for users. He charged that by limiting the House to consideration of a temporary extension, Democratic leaders "want to leave the door open to taxing the Internet in the future."

Watt, however, argued that a temporary ban was the right way to go both for political and practical reasons.

The Senate, which must act next on the legislation, has "in many ways made it clear that a permanent moratorium would be dead on arrival," Watt said. Without quick action, the ban was in danger of expiring before new legislation could pass, he said.

Watt said the bill also will allow lawmakers to make changes as needed, as has occurred the two times the moratorium has been extended since 1998.

Action is uncertain in the Senate, where there is also considerable support for a permanent tax ban.

The bill is HR 3678.