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Congress Likely to Give Final OK to Local Internet Tax Ban

by Associated Press /

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State and local governments would be permanently barred from taxing access to the Internet under a bipartisan compromise that Congress is a step away from sending to President Barack Obama.

The Senate was expected to vote Thursday to approve the language, part of a wide-ranging measure that would also revamp trade laws.

The Internet tax provision had broad support, with few senators eager to oppose the bill and open the door to taxing online access during an election year. Nonetheless, some were resisting the legislation because of trade provisions and a long-running dispute over a separate proposal on taxing online sales to consumers.

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Since 1998, in the Internet's early days, Congress has passed a series of bills temporarily prohibiting state and local governments from imposing the types of monthly levies for online access that are common for telephone service. Such legislation has been inspired by a popular sentiment that the Internet should be free — along with Republican opposition to most tax proposals.

Until now, states that had already imposed Internet access taxes have been allowed to continue. Under the bill the Senate was considering, those states would have to phase out their taxes by the summer of 2020.

Seven states — Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas and Wisconsin — have been collecting a combined $563 million yearly from Internet access, according to information gathered by the nonpartisan Congressional Research Service.

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