Senate Majority Leader Pits One Internet Tax Against Another

A new Senate bill may force lawmakers to agree to expand the reach of sales taxes on out-of-state retailers, or see the end of a law that forbids states and cities from imposing a tax on internet access. As the Wall Street Journal reported on Friday, this choice for lawmakers is due to Senate Majority Leader Harry Reid’s handling of a bill called the Internet Tax Freedom Act.

The bill, which passed the House by a large margin, would make permanent a moratorium on ISP taxes. The measure is popular amongst voters because it means consumers won’t see "service fees," like they see on their cell phone bills.

But Reid did something that some might call a bit shady: he attached it to another bill called the Marketplace Fairness Act. That bill, which passed the Senate last year, would require online retailers to collect tax on sales they make to out-of-state consumers.

The conundrum for Senators is that if they vote against the bill, there is a good chance the tax moratorium on internet access will expire when a sunset clause goes into effect in November. This will allow local governments to start charging fees.

The bill is likely to come to a vote before the August recess.

We will have more on this story as it develops.

Source: GIGA OM

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