[Congressional Record (Bound Edition), Volume 149 (2003), Part 23]
[Senate]
[Pages 31859-31860]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        INTERNET TAX MORATORIUM

  Mr. FRIST. Mr. President, on November 1, 2003, the most recent 
Internet tax moratorium expired. In the weeks prior to and following 
this expiration date, I have been trying to broker a compromise between 
those who, like me, support making the moratorium permanent and those 
who oppose a permanent extension. Unfortunately, we have been unable to 
reach resolution on legislative language that would allow us to make 
the moratorium on Internet access technology neutral and permanent. 
However, I remain committed to passing a revised moratorium next year 
which ensures that all Americans can receive Internet access tax free, 
regardless of technology.
  I respect the arguments of those Senators who are concerned that the 
language in S. 150, the Internet Tax Nondiscrimination Act, will 
infringe on the ability of States to tax traditional telecommunication 
services. Because of their concerns, I allowed the bill to be fully 
debated on the floor of the Senate for several days. In the end, after 
spirited discussions, the relevant parties could not reach agreement on 
appropriate language and the current moratorium had expired.
  After that process failed to achieve a resolution, I sought to broker 
a compromise by laying out a menu of options from which the parties 
could choose. None of these options were perfect, and none went as far 
to protect the Internet from taxation as I would have liked. But in the 
spirit of compromise, I believed that taking some action was better 
than doing nothing at all. Unfortunately, the various relevant parties 
disagreed. Every option I suggested was rejected by both sides and both 
indicated that no deal was better than any of the options I had set

[[Page 31860]]

forth. As an aside, this was the first, last and only moment when the 
various parties were able to reach agreement with respect to anything 
having to do with taxing the Internet.
  At this point it became clear to me that no agreement was in the 
making with respect to a permanent or even multiyear extension of the 
Internet tax moratorium. I therefore suggested that we pass, as a part 
of the omnibus appropriations bill, a so-called ``Internet-tax CR''--
basically an extension of the expired statute to cover the gap between 
November 1 and the second session of the 108th Congress when the Senate 
would be able to return to this issue.
  My concern was that if we did not extend the moratorium, the Internet 
would be open to multiple and discriminatory taxes for the fist time in 
5 years. And while a simple extension would not have addressed the 
troubling efforts in several States to begin taxing DSL access, I still 
believed that doing something was better than doing nothing. Further, I 
was prepared to make it clear that the spirit of the original 
moratorium was intended to make all Internet access tax free, and that 
extending the current moratorium should not be an invitation for any 
State to continue or begin anew taxing DSL.
  Much to my disappointment, even a simple extension of the original 
moratorium failed to gain consensus support. And even when we agreed to 
consider modifying the original language to prevent states from taxing 
DSL for the duration of this Internet-tax CR, the House of 
Representatives was unwilling to agree.
  As the strong bipartisan support of the Internet moratorium 
indicates, there is a growing consensus that the Internet should never 
be singled out for multiple or discriminatory taxation and that all 
forms of Internet access should be tax free. Rather than finding new 
ways to tax the Internet, the unprecedented benefits it offers to our 
society and economy should be encouraged by policymakers at the 
Federal, State and local levels. We must not allow differences over 
details of the moratorium to result in tax policies which damage this 
critical economic engine of the future. The Internet is too important.
  I specifically thank Senator McCain, Senator Sununu, and Senator 
Allen for their excellent leadership and dedication to this issue. 
Their efforts have ensured that this important technology issue 
receives the attention it deserves from Congress. As majority leader, 
it is my intention to work hard to get the strongest, longest ban on 
Internet taxes as possible. As such, I will make passing a meaningful, 
revised Internet tax moratorium a priority for next year.

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