A monthly phone bill of $50 now includes as much as $10 in taxes. And some in Congress warn that consumers soon could be hit with similar assessments for high-speed Internet access.
For nearly a decade, the lines carrying the Internet into homes and businesses have been a virtual tax-free zone. But that could change Nov. 1 when a federal ban on Internet access taxes expires.
Almost everybody agrees that the politically popular moratorium should be extended to encourage continued investment in the high-speed lines crucial to making new online activities possible, particularly video. But changing Internet usage has complicated the issue, threatening to derail an extension and raising the specter of local officials engaging in a land-rush-like race to enact new taxes for surfing the Web.
[…] [As] phone and TV services increasingly are delivered over the Internet, state and local governments worry that more of their tax revenue will disappear because of the federal moratorium. They oppose the permanent extension championed by McCain and a slew of lawmakers, along with Don’t Tax Our Web, a coalition of major telecommunications, computer and Internet companies, including AT&T Inc., Google Inc. and Time Warner Inc.
Instead, the U.S. Conference of Mayors, the National Governors Assn. and other local government groups want to narrow the definition of Internet access put in place in 1998, which could be interpreted to cover anything delivered online, and to make the extension temporary in case technology again overtakes the law.