Internet tax ban bill passed in US

The US House has passed a bill that would ban the country's governments from levying taxes unique to the internet.

The US House has passed a bill that would ban the country's governments from levying taxes unique to the internet.

The House, on a voice vote, passed the Internet Tax Nondiscrimination Act, which would prohibit such taxes as e-mail taxes, bandwidth taxes, or bit taxes.

To become law, the bill would have to pass the US Senate and be signed by President Bush. The Senate Commerce, Science and Transportation Committee approved its version of the bill on July 31, and its next stop is the full Senate.

Congress first approved a three-year moratorium on internet-only taxes in 1998 and renewed it again in 2001. The moratorium is set to expire on 1 November unless Congress acts.

Some House Democrats had questioned if the bill would complicate efforts of states to collect taxes from retailers outside their borders, but the bill passed over their objections. The bill does not prohibit states from collecting sales taxes on products their residents order from catalogues or other remote retailers, but requires that internet retailers be treated the same as other remote retailers.

The House's bill ended a grandfather clause in past versions of the moratorium, which allowed 10 states that had passed internet taxes before 1998 to continue to collect them. Some Democrats had protested the loss of those taxes for those states.

Chris Cox , chairman of the House Policy Committee, said the tax ban will help the growth of the internet.

Grant Gross writes for IDG News Service

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