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Bush extends tax break for online access

By Kelly Wallace, CNN White House Correspondent

WASHINGTON (CNN) -- President Bush, with a stroke of his pen Wednesday, extended the ban on Internet access taxes for another two years, calling it an important step during "this crucial holiday shopping season."

"Online spending is estimated to account for 15 percent of total holiday purchases this year," Bush said in a written statement. "This bill will be a big help to those Americans who shop from home because they are unable to travel to stores and malls."

The measure, which passed the House of Representatives in October and the Senate earlier this month, provides a two-year moratorium on online access taxes. The ban does not extend to online purchases.

The Internet currently has about 130 million users, but accounts for less than one percent of all retail sales.

Congress passed the first ban in 1998 to prevent state and local governments from imposing new taxes that might affect the future of the new medium. Many state and local governments have been pushing Congress to allow them to collect taxes on online and catalog sales, claiming they lose billions in tax revenues.

Treasury Secretary Paul O'Neill hailed the new law as a way to "provide additional time to analyze the impact of e-commerce on local and state tax receipts, while ensuring that the growth of the Internet is not slowed by new or discriminatory taxes."

"New technology shouldn't be treated as a new means of increasing taxes on the American people," O'Neill said in a statement.

Bush said the new law would ensure the growth of the Internet. "The Internet is an innovative force that enables such applications as distance learning, video conferencing and precision farming," said the president. "Government must do its part to make access to these services affordable. It should not raise costs through additional taxation."

Bush also signed into law Wednesday two of the 13 spending bills that must be approved to keep the federal government operating -- a $38.7 billion measure for the Commerce, Justice, State, the Judiciary and related agencies, and the $16.1 billion measure covering Agriculture, Rural Development, the Food and Drug Administration and related agencies.

So far, the president has signed eight spending bills into law, with five of the appropriations bills still pending.


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