Net Gain

Congress was smart to end a months-long stalemate over whether to tax individual access to the Internet.

Last week, it voted to extend a ban on state and local governments' ability to create such a tax. The vote puts a moratorium on any Web-access tax until Nov. 1, 2007 (though some states that already had such taxes were grandfathered in). President Bush has signaled he'll sign the measure.

The bill applies to an array of online connection services - DSL, dial-up, cable, and wireless. But the bill doesn't prevent the emerging technology of voice over Internet protocol (VOIP - or phone calls made over the Internet) from being taxed. Many states were worried they'd lose millions in telephone taxes as customers migrated to using VOIP. Since the Federal Communications Commission recently ruled that only the federal government had the authority to tax online phone service, that debate probably will stay heated.

The fastest rise of Net use in the US is occurring among low- and middle-income citizens. The US still lags far behind other countries such as Taiwan, Canada, and South Korea when it comes to high-speed Internet access, according to a recent report issued by the Department of Commerce.

Tax-hungry states shouldn't be limiting the Internet's growth with an access tax. Indeed, without Congress's ban, many states would probably rush to impose access taxes, impeding the Web's potential.

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