CONGRESS DAILY: TAXES: GOP Pushing For Quick Action On Internet Moratorium Bill

CONGRESS DAILY
October 29, 2007
TAXES: GOP Pushing For Quick Action On Internet Moratorium Bill
By David Hatch

Republican lawmakers are scrambling to secure House approval this week of Senate-passed legislation to extend the Internet tax moratorium by seven years so it reaches President Bush by Thursday. That is the day that the prohibition is set to expire. The Senate adopted the seven-year timeframe late last week, but the House earlier approved a four-year continuation. Sen. John Sununu, R-N.H., and House Minority Leader Boehner are leading the charge for a quick House vote. "There is strong, bipartisan support for my legislation -- the longest extension of a ban ever considered by Congress, and I hope that the House acts before [this] Thursday and sends the bill to the president," Sununu said in a statement. He and Sen. Thomas Carper, D-Del., wrote the Senate language. Boehner issued a similar statement late last week. "I believe Congress has missed a golden opportunity to permanently shut the door on Internet taxation, but the bill passed by the Senate is far superior to the measure advanced by the House two weeks ago," Boehner said.

At press time, House Democrats had not returned calls seeking reaction. "Legislatively, it's a lot easier to take up the Senate-passed bill," a Capitol Hill staffer explained. Nevertheless, some industry officials predicted lawmakers would instead hash out a negotiated compromise. The bills differ on the scope of the moratorium, with the Senate version containing a broader definition that exempts more services. It specifically prohibits taxation of Web pages, electronic mail, instant messaging, video clips and electronic storage capacity, regardless of whether these services are packaged with Internet access or available separately. The House bill, however, could potentially leave those services vulnerable to taxation.

"The Congress is moving in the right direction here. They've extended [the prohibition] longer than it's ever been extended," said Kara Calvert, director of government relations at the Information Technology Industry Council. Noting that the gaps between the two bills are relatively small, she predicted lawmakers would easily reach a compromise and said she anticipates a moratorium of five or six years that reflects the broader exemptions in the Senate bill. Danielle Coffey, a lawyer and lobbyist at the Telecommunications Industry Association, which represents telecom equipment manufacturers, was "cautiously optimistic" Congress would agree on final language and move a bill to Bush by the deadline. If the prohibition expires briefly before an extension is approved, Calvert thinks it is doubtful that additional taxes would be imposed by state and municipal governments. "My guess is, that's not going to happen in a day," she said.