Senate Clears Way For Passage Of Internet Tax Bill - Alexander, Carper Praise Compromise Efforts

Posted on November 17, 2004

WASHINGTON - Sens. Lamar Alexander, R-Tenn., and Tom Carper, D-Del., today praised the Senate for working out an agreement that would allow Congress to pass compromise legislation they developed that would impose a temporary ban on Internet access taxes.  Today's approval of a concurrent resolution, which included narrow adjustments for Wisconsin and Texas, clears the way for the House to take up and pass legislation [S. 150] the Senate approved in late April by a 93-3 vote.  During Senate debate on that bill, Alexander and Carper were able to secure language that would impose a temporary ban on Internet access taxes while doing minimal harm to state and local governments.  Alexander and Carper had argued that the original version of the bill would have amounted to a big tax giveaway to the telecommunications industry while doing substantial harm to the revenue base of state and local governments.  Alexander and Carper were then able to secure three major concessions that allowed the legislation to pass the Senate.  Specifically, the bill as negotiated by Alexander and Carper: · Is temporary, not permanent. · Allows states already collecting taxes on Internet access to continue to do so for 2 or 4 years. · And most importantly makes clear that states and cities can continue to collect taxes on telephone services, even if telephone calls are made over the Internet. "The end result isn't perfect, but it is a big victory for states and for enhancing the development of the Internet," said Senator Carper.  "More than a year ago, the Senate was prepared to pass legislation that would have done irrevocable harm to state and local governments.  But the compromise we worked out will do minimal harm to states, while also protecting consumers from taxes on their monthly Internet bills." "This proves the Senate can come to a good result on a complex issue that affects millions of Americans and every state and local government," said Alexander. "This compromise balances well two important principles: federalism and free markets. It temporarily bans state and local taxes on Internet access while doing minimal harm to state and local governments."