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Internet tax ban meets resistance in Senate

Several U.S. senators questioned whether to extend a ban on access and other Internet-only taxes, which expires on November 1. Representatives of Verizon and the National Taxpayer Union Foundation called on Congress to make the tax ban permanent, but several senators said the current ban could allow Internet service providers to package other products with access and exempt them from taxes. Three groups representing state government officials called for a more limited, temporary ban.

Several senators said they would support a temporary ban on Internet access taxes, but only if language in the moratorium is changed to make clear that states are allowed to tax services packaged with access, including music and movies and IPTV. The original Internet tax ban, which went into effect in October 1998, said that access and "other services as part of a package services offered to consumers" may be exempt from taxes. The last extension of the ban, passed in 2004, removed VoIP from the tax ban.

Five other senators introduced a bill, called the Internet Tax Freedom Extension Act, that would extend the ban on Internet access taxes another four years while closing the "loophole" that could allow other bundled services to be exempt from taxes. Three bills introduced this year would permanently extend the ban on Internet-only taxes. But other senators called for the tax ban to be made permanent. If the ban expires, consumers in some U.S. cities could pay up to an additional 30% and a permanent ban would help with Internet service providers' plans to invest in new services.

News source: InfoWorld

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