House Debates Net Tax Ban

At a House hearing in Washington, polticians debated whether or not to renew the ban on taxing net access. Opponents say its original purpose, to spur net usage, has long been accomplished.

Initally passed in 1998 and signed by then President Clinton, the latest renewal is set to expire in November of this year.

Supporters argue that taxing the Internet does not make sense, especially since it has become both an educational resource and commercial entity. Some likened a new tax to charging someone to enter a library or mall.

Both state and local governments see it differently. They say making a ban on taxation permanent could deprive them of a potentially lucrative source of income. Additionally, the ban was put in place to spur the growth of the Internet, which long since has been accomplished.

Despite these protests, it has not stopped lawmakers from introducing legislation that would make the ban permanent.

California Democratic Rep. Anna Eshoo is the latest to introduce such a bill, which is currently making its way through the House. The Senate is also scheduled to hold a hearing on the subject on Wednesday.

As the current law stands, taxation is basically forbidden on dialup or broadband access. There can also not be a different manner of taxation for the Internet as opposed to offline shopping, although states may charge sales tax (and some do).

Many states say they are concerned by an eroding tax base as more consumers opt to shop electronically rather than through brick-and-mortar stores, meaning these government entities would be collecting less tax revenue.