Colorado House committee refuses to ban VoIP tax

The measure lost by a close 7-6 margin, but a stipulation of the vote was that the proposal cannot be brought up again this term.

Opponents testifying before the committee said that exempting VoIP from taxes could accelerate the movement of customers from other phone companies whose services are taxed. That migration, it was argued, would mean less revenues for cities and counties as the base of subscribers for taxed phone services diminishes.

"If we say that wireline and cell-phone service should be taxed but not VoIP, " said Arvada Mayor Ken Fellman, "almost everyone will transition" to VoIP.

Surprisingly, the largest traditional broadband telco in the state backed the measure. John McCormick, Denver-based Qwest assistant vice president for public policy, said that not passing the measure provides "a disincentive to be a Colorado company in this market."

Qwest began its own VoIP service last year.