Senate Moves Closer to Passing Internet Tax Freedom Act

(September 30, 1998) The U.S. Senate moved a step closer to passing S 442, the "Internet Tax Freedom Act," on Tuesday, September 29, by voting overwhelming to invoke cloture, clearing the way for a final vote, possibly on Thursday.

The bill, which is sponsored by Sen. Ron Wyden (D-OR), would impose a moratorium on new, multiple, and discriminatory taxes on the Internet.  Sen. Bob Graham (D-FL) is leading a small group of Senators adamantly opposed to the bill.  He was the lone vote against the bill when it was approved by the Senate Finance Committee on July 28.   A version of the bill approved earlier by the Senate Commerce Committee would impose a six year moratorium, while the Senate Finance Committee version would impose only a two year ban.

Under the rules of the Senate, members are allowed to debate without limit, thus permitting Senators to delay or defeat bills simply by talking endlessly about them.   However, the debate, or filibuster, can be ended by a cloture vote, which requires a three fifths super majority for approval.

The House version of the bill (HR 4105 EH) passed on June 23.  Rep. Chris Cox (R-CA) is leading the House effort to enact this bill.  He stated after the Senate vote that:

"I expect the Senate bill to end up looking very much like the version of the Internet Tax Freedom Act that the House passed unanimously on June 23, 1998. That means we will reconcile the bills quickly, and final legislation should be on the President's desk within weeks or even days. This legislation, which is vital to the Internet's continued growth and technological development, will soon be law."

The cloture vote was held late Tuesday morning.  There were 89 votes in favor of invoking cloture, and 6 against, with 5 Senators not voting.  The negative votes were cast by Bob Graham (D-FL), Bob Bennett (R-UT), Max Cleland (D-GA), Slade Gorton (R-WA), Dale Bumpers (D-AR), and Mike Enzi (R-WY).  The Senators who did not vote were Barbara Boxer (D-CA), Fritz Hollings (D-SC), Jeff Sessions (R-AL), Chuck Hagel (R-NE), and Carol Braun (D-IL).  The measure needed a three fifths majority to pass.


Related Stories

Senate Finance Committee Passes ITFA, 7/29/98.
House Passes ITFA, 6/24/98.

Judiciary Committee Passes ITFA, 6/18/98.
Commerce Committee Passes ITFA, 5/15/98.
ITFA Limits FCC Control Over Net, 5/15/98.
Lieberman and Gregg Introduce an ITFA, 1/1/98.
Clinton Endorses ITFA, 2/26/98.


Overview of HR 4105 / S 442

Moratorium on Internet access taxes.  These bills prohibit taxes on Internet access charges.  Depending upon decisions made in a House-Senate conference, a few states that currently tax Internet access may be permitted to retain those taxes under "grandfather rights."  The House prohibition lasts three years; the length of the Senate moratorium is two years in one version of the bill, and six in another, and will be determined during Senate floor debate.
No multiple or discriminatory taxes on electronic commerce.   These bills protect against new Internet-specific tax liability for consumers and vendors.  Web search taxes, bit taxes, e-mail surcharges, and other levies that target the Net are outlawed. Tax collection requirements that discriminate against out-of-state web sites are banned.
Commission to study question of remote sales.  These bills create a temporary Advisory Commission on Electronic Commerce to study electronic commerce tax issues and report back to Congress.
Global tariff-free zone.  These bills authorize the United States to work in international bodies for the establishment of the Internet as a global free trade zone.