Seven More Years

People using the Internet should breathe a sigh of relief because we've got seven more years for a moratorium on Internet taxes. That's what President Bush signed into law yesterday. After the House voted 402-0, President Bush signed HR 3678 into law. While this law does not make permanent a ban on Internet access taxation, it does provide a measure of certainty for the next seven years. Previous moratoriums on Internet taxation only lasted three or four years.

The law, "Internet Tax Freedom Act Amendments Act of 2007," will add seven years to the life of the moratorium, which prohibits state and local government from taxing Internet access and electronic commerce. As a result, the act now will expire Nov. 1, 2014.

Retailers, ISPs, consumer groups, trade associations and lawmakers all hailed the bill's passage as a victory.

"The DMA has worked tirelessly over the last six months to help ensure that access to the Internet is not impeded by unnecessary taxes. We are especially thankful that this priority legislation was passed by Congress in advance of the pending November 1 deadline," said Steven Berry, executive vice president for government affairs and corporate responsibility at the Direct Marketing Association, in a statement.

"Congress clearly understands that taxing the Internet at this critical juncture is irresponsible public policy that would have dire economic consequences for our nation ... the Internet is far too valuable of a commodity to our economy to be impeded by various taxes at every level of government."

Internet taxation is a major issue because states have long complained that taxes have not been collected from online sales - lost revenues from the states. Internet sales are one of the fastest growing areas of the national economy and states claim that they stand to lose hundreds of millions of dollars if taxes are not collected on such sales.

Had President Bush not signed the extension, the moratorium would have expired November 1, 2007.