TELECOM Digest OnLine - Sorted: Bush Signs Internet Access Tax Ban Into Law

Bush Signs Internet Access Tax Ban Into Law

Lisa Minter (lisa_minter2001@yahoo.com)
Sat, 4 Dec 2004 11:44:09 EST

WASHINGTON (Reuters) - President Bush signed a bill that renews a ban
on Internet access taxes on Friday amid praise from lawmakers and
trade groups who said the measure would encourage more people to sign
up for high-speed broadband service.

Bush said repeatedly on the campaign trail this year that a ban on
access taxes is crucial to reach his goal of universal broadband
access by 2007, enabling more Internet users to download video, music
and other bandwidth-intensive content.

The ban on access taxes, in place since 1998, expired more than a year
ago when congressional lawmakers could not agree whether to make it
permanent or merely extend it for three years.

Backers at the time warned that Internet use could suffer if tax-happy
states imposed new surcharges on the monthly fees that Internet
providers like America Online Inc. charge their customers.

But some senators said the ban would require states to raise taxes in
other areas to make up for the millions of dollars they stand to lose
as telephone service and other taxable activities migrate to the
Internet.

No states or local governments imposed new Internet taxes during the
year the ban was not in effect.

Congress approved a compromise last month that extends the ban until
2007 and extends it to cover broadband service. Existing broadband
taxes will be gradually phased out.

"It's an important step forward in bridging the economic digital
divide," said Sen. George Allen, a Virginia Republican and a bill
sponsor who attended the signing ceremony at the White House complex.

"This measure will help make sure for those of lower income and those
who live in small towns and rural areas that they can get connected
more easily to broadband," he said.

Broadband costs between $30 and $50 per month, compared with as little
as $9.95 per month for regular dial-up access.

Roughly 25 percent of U.S. adults have broadband access, up from 14
percent in 2002, according to the nonprofit Pew Internet and American
Life Project. Overall Internet use during the same period has held
steady at around 60 percent.

Several technology-industry trade groups also praised Bush's action.

(Additional reporting by Jeremy Pelofsky)

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