Washington, DC, November 22--Congress Friday reinstated a ban on Internet access taxes after the House of Representatives agreed to extend it for another three years rather than make it permanent.
By voice vote, the House passed a Senate bill that prevents state and local governments from taxing the monthly fees Internet providers like EarthLink Inc. (down $0.15 to $10.32, Research) charge their customers.
The Bush administration is expected to sign it into law.
The ban, in place since 1998, expired one year ago amid dire predictions that tax-happy states could choke the growth of the Internet.
The House voted to make the moratorium permanent, phase out existing state taxes and ensure that it applied to high-speed "broadband" service.
But the Senate let the ban lapse after some lawmakers said it would require states to raise taxes in other areas to make up for the millions of dollars they would lose as telephone and other services migrate to the Internet.
The Senate passed a compromise bill in April that would reimpose the ban until November 2007, a measure resisted by House Republicans until the final days of the session.
"Without any action by this Congress... the Internet economy and its participants are more vulnerable, even if we must act on a weaker bill," Wisconsin Republican Rep. Jim Sensenbrenner said on the House floor.
North Carolina Democratic Rep. Mel Watt said he would help Sensenbrenner make the ban permanent in the next session if the Republican would allow states to tax online sales.
"We will deal with both of those issues and consider them in the next Congress," Sensenbrenner said.
