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The Wall Street
Journal In another Congressional miracle (see above for more), the Members have decided to use this lame-duck session to perform the good deed of renewing the Internet tax moratorium. Barring some procedural hiccup, Web access fees will be officially off limits to the tax man for at least a few more years. This is a very positive development, especially if yours is one of the more than 60 million U.S. households connected to the Web. Without an extension of the moratorium, you might have been looking at a double-digit increase in your monthly bill. Technically the ban on taxing Internet access, in place since 1998, expired last November. But because the House and the Senate had separately passed extensions, giving the impression that final passage was just a matter of time, states and localities have held off from imposing levies. All that would have changed, however, if lawmakers had gone home without doing anything, signaling tax-ravenous state officials that the Internet was now fair game. That nightmare scenario included rulings as early as next month from unelected state bureaucrats cooking up taxes for digital subscriber lines (DSL) and cable modems faster than you can say Merry Christmas. Preventing this not only bodes well for the millions of homes still waiting on broadband. It also helps dodge a potential obstacle to economic growth. The Internet improves the productivity of the U.S. workforce, adding some $50 billion annually to GDP, according to the Brookings Institution. Internet taxes and tolls can only be a drag on this trend by discouraging use of the medium and depressing capital investment. We prefer the House version, which makes the moratorium permanent. But it looks like the Senate bill, which merely extends the ban to November 2007, is the one that will become law. More important is that the renewed ban makes explicit that the moratorium covers broadband. Under the old law, enterprising states had found a way to tax connections like DSL by labeling them "telecom services." The new law makes clear that any Internet access -- whether DSL, cable, satellite or regular old dial-up -- is tax free. Of late Senator George Allen, a Virginia Republican, has been doing much of the heavy lifting on this. But GOP Congressman Chris Cox of California and Democratic Senator Ron Wyden of Oregon are the authors of the original moratorium and also deserve credit for their continued efforts to keep these regressive taxes at bay. On the other hand, Republican Senators Lamar Alexander of Tennessee and George Voinovich of Ohio went out of their way to make things difficult. It's no coincidence that both are former Governors and were carrying water for tax-happy state legislators and bureaucrats back home, some of whom have publicly floated the idea of taxing every e-mail. In the end, it
was House Speaker Dennis Hastert, Senate Majority Leader Bill Frist
and others in the Republican leadership who decided to make this unfinished
business a priority this week. Elections have consequences. Copyright 2004 Dow Jones & Company, Inc. All Rights Reserved |
