A Reuters report said Senate members who wanted a shorter ban, and those who wanted to make it permanent, reached the agreement ahead of the November 1st expiration of the 1998 ban.

The House of Representatives had already agreed on a compromise, but only for a four-year ban. Congress will have to reconcile its differences and send something along to the White House for President Bush to sign.

Without a ban in place, state would likely look to the millions of Internet-using people and businesses as a ready stream of new revenue to exploit. Senator John Cornyn (R-TX) praised the extension, saying it “has helped the Internet expand and has protected entrepreneurs from burdensome taxes.”

Efforts to push the ban out beyond four years hit a wall with House Democrats. Texas Republican Lamar Smith said on his website a permanent ban offers a boost to economic growth.

“High-tech and IP industries account for over half of all U.S. exports, represent 40 percent of our economic growth and employ nearly four percent of U.S. workers,” he said.

“Americans want and need a permanent ban on Internet access taxes,” said Smith. “Unfortunately for most Americans, the Democrat leadership’s love for the tax man has overcome their common sense.”

Smith also claimed the Democratic majority refused to look at any bans beyond the four year extension they have granted.

Google Says No To Net Taxes

Siding against additional taxes is an easy position to take in most discussions. One will find very few people in favor of giving Washington more money to spend on an unpopular war or pork projects like bridges to sparsely populated Alaskan islands.

Google has thrown in with the supporters of Don’t Tax Our Web, a group that opposes duplicative, discriminatory, and hidden taxes. Net companies like Amazon.com, Yahoo, and eBay are also involved.

Google policy counsel Pablo Chavez said on the company’s Public Policy blog that the current moratorium has helped “make the internet a universally accessible, free, and open platform capable of delivering a rich variety of services to consumers.”

Chavez also contended that an extension of the moratorium on Internet access taxes would help increase broadband penetration across the US. We don’t agree with that exact assessment, since we have seen a decade and $200 billion in tax breaks pass in the telecom industry without fulfilling the promise of true high-speed access to households.

We would argue that extending the moratorium should come with conditions to motivate investments in technology that will reach more people, including the rural population, with real broadband service. WiMAX and broadband over power lines could be two solutions.

States like Pennsylvania and others with laws on the books that ban municipalities from offering broadband and similar services, thanks to relentless cable and telco lobbying, need to strike those bans from their books. If tiny Glasgow, Kentucky can deliver inexpensive broadband on a municipal level, cities elsewhere should be allowed the same privilege.

Google’s stance on the moratorium only addresses part of the issue of increasing broadband access. If the public policy makers at Google really want to make a difference, they should be lobbying for more municipal efforts across the country along with their no-taxes position.

The bill was drafted by Senators Tom Carper, D-DE, and Lamar Alexander, R-TN. The Internet tax moratorium has been in place since 1998. The Carper-Alexander legislation would close tax loopholes and offer a clearer definition of "Internet access" while protecting services provided by state and local governments.

"Our bill would ensure that consumers continue to enjoy tax-free access to the Internet, including e-mail and instant messaging," Sen. Carper said 

"In the meantime, we fix many problems with the current law so that as future services, such as cable television, migrate to the Internet, we don’t completely erode the tax base of state and local governments."

The Carper-Alexander  bill also closes a loophole that was in the original 1998 moratorium that would allow an Internet Service provider to bundle Internet access with other services and make them all tax-free.

The reasoning behind closing the loophole is that it would still keep Internet access tax-free and also not harm the tax base of state and local governments.

"If we could liken the Internet to a mall, a place where you can go in and purchase goods and services, and also liken it to a library, a place where you can go and pull a book, pull a resource, and obtain some information, why would we tax a person upon entering a mall or why would we tax a person upon entering the library?" asked Rep. Hank Johnson, a Democrat from Georgia.

This moratorium, which was originally imposed in connection with our proposed acquisition of Copernic Technologies and the recently announced LOI with Copernic, will be in effect until such time as the due diligence with respect to Copernic assures the Company that there is no material information which could have necessitated a moratorium or until any such possible information has been publicly disclosed. The Company advises that this moratorium restricts any possible repurchase of Mamma.com shares under the normal course issuer bid announced September 7, 2004.

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