The "Internet Tax Non-discrimination Act" (S. 150) passed yesterday by a 93-3 vote is a lot better than it was when I wrote about it in Senate Fake-Out On Internet Tax and E-Mail Taxes Start Saturday a few months ago.
Both S. 150 and the corresponding House bill were simply going to exempt telecommunications companies from state and local taxes, essentially giving them the status of churches (but "churches" that tithed to the legislators' campaign funds).
Thanks to a bipartisan handful of Senators, this is no longer the case in at least one of the bills. As the National League of Cities described it:
Sens. Lamar Alexander (R- Tenn.), George Voinovich (R-Ohio), Thomas Carper (D-Del.), Byron Dorgan (D-N.D.), Kay Hutchinson (R-Texas) and Dianne Feinstein (D-Calif.) eloquently argued on behalf of local governments.
... the measure includes the following:• An extension of the moratorium against Internet access taxes for 4 years;
• An expanded definition of Internet access [to include DSL];
• An explicit exemption from the ban on taxes on telephone services in the event those services are provided on an internet platform [VOIP];
• A grandfather clause on specific internet access taxes in place prior to 1998 for the full four-year period of the moratorium; and
• A more generalized grandfather clause [to keep taxes] on telecommunication services that are used to access the Internet, such as backbone digital subscriber lines and cable platforms.
Democrat Tom Daschle tried to add an amendment to double the use of ethanol [yes, he did, saying he only wanted to delay passage of S. 150] but that was fended off, and the overall result is not too bad: local taxing authorities may lose $500 million/year by 2006, but the telecom companies do not become tax-free entities, and Internet users will not be taxed for access.
The House bill is a beast of another color, the color of campaign contributions.
Playing the Congressional game of Newspeak, they call HR 49 the "Internet Tax Freedom Act."
In one way that's accurate: telecommunications companies would be free of local taxes.
But the Multistate Tax Commission has estimated that this would cost local governments between $4 billion and $9 billion/year by 2006.
And that's not a good thing because roads still have to built, schools still have to stay open so this would move the tax burden from those who use the services to everyone in the country.
Write your House Representative and tell him he's supposed to be representing you, not his campaign contributors.
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