Internet One Step Closer To Staying Tax Free

The House of Representatives has passed legislation (402-0) extending the moratorium on state Internet access taxes for seven years out to 2014. The bill, set to expire Nov. 1st, has already passed through the Senate last Thursday, leaving final approval up to the President.

While the House bill was three years longer than the body initially proposed, some senators called to permanently end the tax. Telephone based services have not been so lucky. For instance, the FCC ruled internet services that connect to publicly switched phone networks had to contribute to the Universal Service Fund. The issue gets muddier, however, as communication services move completely online.

News reports say if the moratorium is not extended, bandwidth costs could raise as much as 17 percent.

Initially signed into law in 1998, the Internet Tax Freedom Act bars federal, state and local governments from taxing Internet access and discriminatory Internet-only taxes such as bit taxes, bandwidth taxes, and email taxes. It was previously extended to 2007 as the Internet Tax Nondiscrimination Act of 2004.

So it appears that at least taxes on the net will remain neutral.