The era of tax-free e-mail, Internet shopping and broadband connections could end this fall, if recent proposals in the U.S. Congress prove successful.
State and local governments resumed a push to lobby Congress for far-reaching changes on two different fronts: gaining the ability to impose sales taxes on Net shopping, and being able to levy new monthly taxes on DSL and other connections. One senator is even predicting taxes on e-mail.
At the moment, states and municipalities are frequently barred by federal law from collecting both access and sales taxes. But they're hoping that their new lobbying effort, coordinated by groups including the National Governors Association, will pay off by permitting them to collect billions of dollars in new revenue by next year.
If that doesn't happen, other taxes may zoom upward instead, warned Sen. Michael Enzi, a Wyoming Republican, at a Senate hearing on Wednesday. "Are we implicitly blessing a situation where states are forced to raise other taxes, such as income or property taxes, to offset the growing loss of sales tax revenue?" Enzi said. "I want to avoid that."
A flurry of proposals that pro-tax advocates advanced push in that direction. Enzi introduced a bill that would usher in mandatory sales tax collection for Internet purchases. Second, in the House of Representatives, politicians weighed whether to let a temporary ban on Net access taxes lapse when it expires on November 1. A House backer of another pro-sales tax bill said this week to expect a final version by July.