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Bush bans internet taxes

US President George Bush has signed into law a three-year moratorium on internet access taxes, extending a ban on internet taxes that expired a year ago.

The original bill would have permanently extended a moratorium on taxes unique to the internet, including taxes on access and bandwidth, but was held up in the Senate over concerns that it would allow telecoms carriers to avoid taxes on traditional phone services as they moved traffic to VoIP services.

The compromise bill allows US states and cities to continue collecting taxes on phone services, even if the calls are made over the internet. States already collecting taxes on internet access can continue to do so for up to four years.

Technology and telecoms trade groups praised Bush's decision to sign the bill. Roger Cochetti of the Computing Technology Industry Association called the new law an "important, if imperfect win".

"With today's signing of the internet tax moratorium by George Bush, Americans can remain confident that the internet will flourish as a powerful consumer and business tool," Cochetti said. "Though temporary, the moratorium's benefits are clear. Internet access will not, for the most part, face taxes. More important, consumer purchases made on the internet will not be taxed differently just because they were made using the internet."

Walter McCormick Jr, president and chief executive of the US Telecom Association, said the US economy would now benefit from increased investment and innovation in the telecommunications sector.

Grant Gross writes for IDG News Service


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