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Congress Extends Web Tax Ban

Consumers and telecommunications and technology firms rejoiced on Tuesday after the U.S. House of Representatives unanimously voted to extend the moratorium on Internet taxes, prohibiting state and local authorities from taxing Web access for another seven years. The Senate had already passed the measure, which means that President George W. Bush now has to sign off on it before the current ban expires on Thursday. State and local authorities are upset; they wanted to see a shorter extension and a "narrower definition" of the taxes that could not be charged.

But the news is good for just about everyone else, as tax freedom will help spur Web innovation. It's also good news for the economy, which is starting to rely heavily on technology and telecommunications as growth sectors in a slowing market.

While telcos and tech giants alike wanted to see a permanent ban on Internet taxes, Phil Bond, head of the Information Technology Association of America, notes that the extension allows the private sector to invest in Web-based companies "without fear of discrimination." The fed tax ban was passed in 1998 to stamp out "creeping" local taxation that began in the mid-1990s. It prevents the taxation of Web access and the tax discrimination of Web sales as being different from offline sales.

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