Tax Curb: In an effort to discourage...

Tax Curb: In an effort to discourage state and local governments from treating the fast-growing Internet as a potentially huge new source of tax revenue, a group of Capitol Hill lawmakers have introduced a measure to curb taxation of Internet services.

Sen. Ron Wyden (D-Ore.) and Rep. Christopher Cox (R-Newport Beach) last week unveiled a measure that would bar states and cities from imposing special taxes on Internet service providers, saying levies that target firms that provide access to the Internet could thwart the growth of a burgeoning network.

Several states, including Connecticut, Massachusetts, Tennessee and Texas, have already imposed taxes on Internet access providers. The states maintain that companies that electronically connect businesses and consumers to the Internet are telecommunications concerns and therefore subject to excise taxes.

Other states, such as New York and California, have opposed efforts to levy the taxes.

Such levies, said Dean Andal, a member of the California State Board of Equalization, amount to “a substantial impediment to growth of electronic commerce. . . . “

The Internet Tax Freedom Act bill, which also has the backing of Rep. Rick White (R-Wash.), would impose a two-year moratorium on new taxes in order to give a federal task force time to study the issue and come up with better alternatives to raising tax revenue from the Internet.