The U.S. Senate on Thursday voted to renew a four-year ban on taxes on Internet connections such as DSL and cable modems instead of a competing plan that would have made a moratorium permanent.
By a 93-3 vote, the Senate adopted a compromise proposal favored by state governments, which argued that a perpetual ban would deprive municipalities of vital tax revenue and amount to an unfair subsidy for telecommunications companies. "This proves the Senate can come to a good result on a complex issue that affects millions of Americans and every state and local government," said Sen. Lamar Alexander, R-Tenn., who had originally favored a two-year extension but reluctantly supported a longer one.
Thursday"s vote promises to lead to tense negotiations in a conference committee with the House of Representatives, which overwhelmingly approved a permanent ban in September. The ban on access taxes, initially enacted in 1998, expired late last year. It does not affect sales taxes on items purchased over the Internet. The compromise affects taxes singling out Internet access including DSL (digital subscriber line), wireless and even BlackBerry services. Its supporters said it does not change whether or not states may tax voice-over-Internet Protocol (VoIP) services.