Move to extend Internet tax ban stalls in Senate

Fri Sep 28, 2007 9:13pm BST

By Peter Kaplan

WASHINGTON, Sept 28 (Reuters) - An effort by U.S. lawmakers to extend a moratorium on state Internet access taxes has stalled amid a dispute over whether the ban should be permanent or temporary.

The Senate Commerce Committee canceled a planned vote on a bill on Thursday that would have extended the tax ban for at least four more years after a possible compromise on the issue fell through.

"I am disappointed that the Commerce Committee was unable to act on legislation to extend the Internet tax moratorium at today's (meeting)," Commerce Committee Chairman Sen. Daniel Inouye said in a statement.

Inouye said there would be further discussions to try and reach "a reasonable compromise."

At issue is a Senate bill sponsored by Democrat Tom Carper of Delaware and Republican Lamar Alexander of Tennessee that would extend the Internet tax moratorium for another four years.

A similar measure was recently introduced in the House by the chairman of the House Judiciary Committee, Democrat John Conyers of Michigan.

The ban has been in place since 1998, and was last reinstated by Congress in 2004 for a period of three years.

Internet service providers say the price of Internet access could rise by as much as 17 percent if the moratorium on state taxes were allowed to expire.

The four-year extension is backed by the National Governors Association. It includes a "grandfather" clause that would allow a handful of states to continue imposing Internet taxes

-- those that already had a tax enacted in 1998. -- those that already had a tax enacted in 1998.

Internet service providers, including telephone and cable companies, had favored a bill backed by Republicans John Sununu of New Hampshire and John McCain of Arizona which would make the ban permanent.

Senators on both sides of the issue had sought a compromise that would have extended the moratorium to six years. But Inouye canceled the vote on Thursday when it became apparent that several senators from both parties would vote for a permanent ban instead.

Sununu complained that, with time running out, the committee missed an opportunity to move forward on the issue.

((Reporting by Peter Kaplan, editing by Richard Chang; Reuters Messaging: peter.kaplan.reuters.com@reuters.net; email: peter.kaplan@reuters.com; +1 202 898 8463, fax: +1 202 898 8383)) Keywords: INTERNET CONGRESS/

(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN28453115