A bill prohibiting states and municipalities from taxing the Internet was introduced Thursday in both the House and the Senate.
The Internet Tax Freedom Act, sponsored by Representative Chris Cox (R-California) and Senator Ron Wyden (D-Oregon), would establish a task force of local, state, and federal representatives to advise the federal government on how to deal with Net taxation. The House bill would bar the Federal Communications Commission from setting rates for online services.
The bill also calls on the Clinton administration to urge foreign governments to refrain from taxing the Net. The European Union is currently weighing plans for online levies.
"If there's one thing that governments are too good at, it's taxing and regulating," Representative Rick White (R-Washington), a House bill co-sponsor, said in a statement. "Unfortunately, that's not what is best for the Internet, for consumers, or for our future."
The bill would allow continued collection of sales taxes for goods and services purchased over the Net - such as those levied for buying software. But taxes specific to using the Internet, such as those for online access or for using a service like electronic commerce, would be prohibited. The bill would make moot any state or municipal Internet taxation laws already on the books.
Currently, several states, including Iowa, California, and Maryland, are considering legislation to tax the Internet. Massachusetts already has a telecommunications tax that applies to Internet services, but federal lawmakers were unsure if their bill would make that state law inapplicable.
The Wyden-Cox legislation is the second bill to be introduced in the past week aimed at keeping the Net tax-free. Last week, Representative Dave Weldon (R-Florida) introducted a bill to exempt Internet and online services from federal taxes.
