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Net Tax Bill On Way To Bush: Has State IP Tax Provision

Today theHouse of Representives gave final approval to a measure that would extend the prohibition on state-imposed Internet access taxes until November 2007. The bill goes to President Bush for his signature.

Today theHouse of Representives gave final approval to a measure that would extend the prohibition on state-imposed Internet access taxes until November 2007. The bill goes to President Bush for his signature.

A key provision allows states to tax Internet phone services.

A handful of Senators, including Tom Carper (D-Delaware) and Lamar Alexander (R-Tennessee) insisted on this exception. Interesting to note that as former two-term Governors, both Sens. Carper and Alexander are attuned by personal experience to the need states have to raise revenue.

As if to underscore the Internet-themed focus of his initiative, Sen. Alexander posted the following comment on his site after the measure was approved:

"Last year Congress came close to passing legislation that would have cost states billions of dollars in revenue and had the effect of raising local property taxes and state college tuition payments. This compromise is a good result, but only a temporary solution.

"It is time for governors and mayors to sit down with telecommunication company leaders and suggest a permanent solution that simplifies regulation and taxation of Internettelephone technology without harming state and local governments."

Sen. Alexander's enthusiasm for the right of states to tax VoIP runs counter to the FCC's opposition tosuch taxes. It's unclear what the battle lines will be on this one when the new, 109thCongress convenes in early January.

We'll be watching.