House Panel OKs Extending Internet Tax Ban

With less than three weeks remaining before a moratorium on Internet access taxes expires, a bill extending that ban is inching its way forward, following its approval this week by a U.S. Congressional committee.

The Tax Freedom Act of 2007, which would extend the moratorium until to 2011, unanimously passed a House Judiciary Committee vote on Wednesday. Now, the U.S. Senate and House of Representatives must reconcile different versions of the bill.

They’re working against time, however — the current Net tax ban is set to expire Nov. 1.

Assuming it passes Congress, the new Act would narrow the definition of “access” to a consumer’s Internet connection and also exempts e-mail and instant messaging from taxation by local and state authorities.

The bill also renews a grandfather clause that allows nine states, which had been taxing Internet access prior to 1998, to continue to levy fees on connections.

The Telecommunications Industry Association (TIA) applauded the Judiciary committee’s vote.

“We hope that this action will break the logjam and help ensure that the current moratorium on onerous taxes does not expire on Nov. 1st of this year,” TIA President Grant Seiffert said in a statement. “This vote allows continued discussion on the best approach to broadband deployment for all Americans.”

Some industry and public interest groups, however, pressed for more action — and soon.

In an open letter to the National Governors Association (NGA), Broderick Johnson of the Don’t Tax Our Web Coalition asked officials to “urge Congress to act promptly to reinstate the Internet Tax Freedom Act (“ITFA”) prior to its Nov. 1, 2007 expiration.”

The Coalition is comprised of a group of public interest organizations, Internet companies like Amazon and Google and telcos including AT&T and Verizon.

Johnson also raises a concern over what happens if the moratorium is not extended in time. His letter asked David Quam, Director of the NGA’s Office of State-Federal Relations, to request that state governors agree to hold off on immediately raising tolls on Internet access if the deadline hits.