Bush to Sign 7-Year Internet Tax Moratorium

A moratorium on Internet access taxes got a last-minute extension Wednesday, one day before it would have expired.

The White House said President Bush would sign legislation approved by Congress to extend the ban for seven more years.

There was strong support in both the House and Senate for a permanent moratorium, but concerns over the potential long-term impact on state and local governments forced a compromise.

The tax ban, first approved in 1998 and twice renewed, was set to expire Nov. 1.

In addition to extending the ban, the legislation also contains a provision aimed at preventing state and local governments from assessing taxes beyond those levied on simple Internet access. The legislation specifically prohibits taxation on e-mail and instant messaging services "that are provided independently or not packaged with Internet access."

The extension also exempts some states that approved taxes before the original ban was enacted.