Repugs think that taxes are "confiscation" by a "rogue government" when it
comes to their personal money and any taxes that might apply to corporate
dividends -- But not when it comes to taxing the Internet to pay for Bush's
reckless handling of the economy. Then taxes are okay. Then taxes are the
answer. -- Claudia
_________________________
washingtonpost.com
States Skirt Internet Tax Ban
Several States Are Trying to Get Around a Federal Tax Moratorium to Battle
their Budget Deficits
http://www.washingtonpost.com/wp-dyn/articles/A33787-2003Jun9.html?nav=hptoc
_tn
By Brian Krebs
washingtonpost.com Staff Writer
Monday, June 9, 2003; 7:46 AM
At least 18 states have found a way to collect taxes on Internet access,
despite a federal law that bans the practice.
Tax authorities in Alabama, Florida and Kentucky are assessing sales taxes
on the amount consumers pay for high-speed digital subscriber line Internet
service, commonly referred to as DSL.
Maryland, Virginia, and 13 other states have passed laws that require
Internet access to be taxed when it is "bundled" with other taxable services
by a single provider, such as a telephone company. Another six states are
poised to enact similar legislation.
The states' actions appear to violate the Internet Tax Freedom Act, a law
first enacted in 1999 that specifically bans taxes on Internet access as
well as any "discriminatory" taxes targeting the Internet.
The moratorium, set to expire this fall, was not a major crimp in the
states' budgets when it was first put in place during the late 1990s
economic boom. But four years later, a large portion of the American public
and business community is buying Internet access -- an enticing tax prospect
for states facing some of the toughest fiscal problems in decades.
Classifying DSL broadband service as a telecommunications service, not as
Internet access, is one step states are taking to get around the Internet
tax moratorium.
"This isn't necessarily a tax on access per se, but a tax on the [telephone]
line," said Clark Bruner, spokesman for the Alabama Public Service
Commission.
Another tactic some states are using is requiring Internet service providers
to pay hefty taxes on the bandwidth they use to handle Internet traffic.
Service providers often buy or lease bandwidth from wholesalers, but because
the bandwidth not associated with access per se, companies have been unable
to claim that bandwidth purchases are exempted from state taxes.
This week, Atlanta-based EarthLink, the nation's third-largest Internet
service provider (ISP), said its DSL subscribers will see an up to 9 percent
increase in their monthly bills because of taxes it now has to pay on the
purchase of bandwidth.
Earthlink tax director Mike Shaw said the company opted to make the change
after deciding it was no longer able to absorb the taxes on its own.
"Many states are carving out the underlying telecom network portion of DSL
as not being in the nature of Internet access and therefore not protected by
the moratorium," Shaw said. "The law does infer some amount of distinction
between telecom service and Internet service, and that's enough for states
to latch onto and say it was never intended to protect telecom services."
America Online started collecting taxes on its DSL service in May 2002.
Company spokesman Nicholas Graham said that the nation's largest Internet
service provider sent e-mails to its members who would be affected by the
change, and offered an 800-number explaining why DSL is not covered by the
moratorium.
The nation's telephone companies and wireless providers want Congress to
rewrite the law so that it bans taxes on Internet access, even when it is
DSL service. Rep. Mel Watt (D-N.C.) last month offered the idea as an
amendment on a bill to make the Internet tax moratorium permanent, but later
withdrew it.
An aide to Rep. Christopher Cox (R-Calif.) said states are misreading the
moratorium. "I think [Cox] is very sympathetic to the telecom position on
this. The way we read it, the law was meant to say the tax ban was never
intended to knock out other taxes that telecommunications companies already
pay," the aide said.
For the former regional telephone monopolies, the so-called Baby Bells, the
issue is one of fairness. The Bells are struggling to compete with the cable
industry to offer packages of voice, video and high-speed data services.
They note that the states are imposing taxes on DSL while cable companies
remain protected under the tax moratorium.
"The bottom line is we want to get it clarified in the legislation that DSL
as it is a part of accessing the Internet should be exempt from taxes," said
BellSouth spokesman Joe Chandler.
Nearly all the major telecommunications companies are working on changes
they would like to see when the bill to extend the moratorium comes before
the House Judiciary Committee.
An example of the give-and-take approach the telecoms are taking is the fact
that the companies are preparing an amendment would exempt from the ban any
service that allows people to make phone calls via the Internet. While
Internet telephony is still in its infancy, some industry observers predict
that one day it will give the long-distance companies a run for their money.
Critics of the telecom industry's plans worry that exempting all
telecom-based Internet services from taxation would further cut into state
revenues, which are already feeling the pinch as taxes on long-distance
service decline as consumers substitute e-mail for phone calls.
Mark Cooper, director of research for the Consumer Federation of America,
questioned the very premise of an Internet tax moratorium.
"The Internet is not a baby anymore," he said. "As a commercial enterprise,
it's well in its late teens, and it is clearly using the telecom
infrastructure of this country in ways that are replacing certain
traditional telecommunications services. So, it's high time for us to
consider whether or not the Internet is paying its fair share of the
resources it uses."
© 2003 TechNews.com
Claudia D. Dikinis
http://starcats.com
Political & Personal Astrology for a New Millennium
