House extends Internet tax ban

The House of Representatives voted Wednesday to extend the current ban on

Internet taxes to October 21, 2006. The bill now heads to the Senate where

it is not expected to pass.

The Internet Non-Discrimination Act extends the ban, which ends October

1, 2001, on new taxes and ones aimed specifically at the Internet. It does

not ban sales taxes on electronic commerce.

The bill passed 352 to 75, with seven representatives not voting. An

attempt to extend the ban for only two years failed. The White House issued

a statement earlier in the day backing a two-year extension, saying it could

delay work on Internet sales taxes.

The bill also eliminates a clause that grandfathered several jurisdictions

that were taxing the Internet before the ban.

Taxing the Internet has been widely debated recently. Last month, The

Advisory Commission on Electronic Commerce presented its report that recommended

extending the ban five years.

However, most state and local officials, including 42 governors who

signed a letter opposing the report, say it misrepresents the commission.

Congress mandated that any recommendations garner a two-thirds vote, not

the simple majority the commission received.

The dissenters believe Internet businesses are getting an unfair advantage

because of the ban, and feel that traditional bricks-and-mortar stores are

being hurt. They also believe that the loss in tax revenue hurts state and

local governments.

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