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No New Internet Taxes

October 25, 2007 - by Donny Shaw

Looks like everyone’s favorite series of tubes will remain tax-free for at least four more years. The Senate tonight, hot on the heels of the House, passed a bill by unanimous consent to extend a moratorium preventing states and localities from imposing taxes on Internet services. Because there was no recorded roll call and the description of the bill the Senate passed doesn’t seem to match any of the proposals that have been introduced, I am not sure what bill they actually passed. But CongressDaily ($) outlines how the Senate came to reach their agreement and what’s in it:

>The chamber had been scheduled to vote today on a cloture motion on an amendment by Sen. John Sununu, R-N.H., to make the moratorium permanent. Sununu had offered that proposal to Amtrak reauthorization legislation currently on the floor.

>Sen. Thomas Carper, D-Del., an opponent of a permanent ban, had filed a second-degree amendment to grant a four-year extension. The House last week passed a four-year extension.
>During floor debate Thursday, Carper went further and endorsed a six-year continuation. “I’d be happy to talk about alternatives,” Sununu said during a colloquy with Carper, presaging the eventual compromise.
>"A seven-year extension nearly doubles the ban that was passed by the House and goes further on technical points to protect e-mails and instant messaging from taxation," said Sununu.

And that’s what they all agreed on. Earlier this week, the Congressional Research Service issued a memo (.pdf) in response to an inquiry by Senator Ron Wyden (D-OR) that concluded what Sununu said above; that the House-passed internet tax moratorium could have opened up the possibility of new taxes on emailing and other Web services.

The Senate and House-passed bills have to be reconciled by a conference committee before going to the President to be signed into law, hopefully before the current moratorium expires on Nov.1. In light of the CRS memo that was issued after the House passed their bill, the conference committee will likely adopt the technical points in the Senate’s bill that protect emails from being taxed. The other issue that will have to be hammered out is how long to extend the moratorium — the four years that the House has proposed, or the seven proposed by the Senate.

UPDATE: According to the most recent Congressional Record Daily Digest, the Senate approved H.R.3678, the same bill as the House, but with an amendment from Sununu that extends it three more years.

(It’s hard to pick out a good picture of the internet. I like the one above because you can actually see the series of tubes in action. Truly mind blowing.)

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