House Panel Votes to Keep Internet-Tax Ban

A House subcommittee voted Thursday to make permanent a ban on Internet-specific taxes.

The Judiciary Committee’s commercial and administrative law subcommittee passed a measure by voice vote that would make permanent a ban on “multiple and discriminatory” taxes on Internet access fees and online traffic. The ban is due to expire in November.

Senior Bush administration officials last week urged Congress to extend the ban before it expires, saying new taxes could slow the roll-out of high-speed access to the Internet.

The ban does not address online sales taxes, which are prohibited under a 1992 Supreme Court decision that forbids states from taxing catalog, telephone and other remote sales.

Cash-strapped states, bricks-and-mortar retailers and other advocates of online sales taxes have sought to tie the two issues together, hoping to link the politically popular moratorium with the more controversial effort to impose sales taxes on the Web.

Subcommittee Chairman Chris Cannon (R-Utah) said the two issues should be dealt with separately.

“I think we’ve come to a point where we understand what we’re doing with the moratorium, and we want to make it permanent,” he said.

Cannon said his panel would hold a hearing to examine state efforts to simplify their sales tax codes, which would make collection of such taxes less difficult.