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Senate passes Internet Tax Freedom Act

October 9, 1998
Web posted at 11:25 AM EDT

by Nancy Weil

(IDG) -- The U.S. Senate voted Thursday 96 to 2 to approve a bill that places a prohibition on taxes of Internet access and goods bought online.

The Internet Tax Freedom Act would impose a three-year moratorium on federal, state and local taxes on Internet access and electronic commerce. The U.S. House rendition of the bill also imposes the same moratorium. The Senate debated various moratorium lengths and issues related and unrelated to the bill in recent days before reaching agreement.

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The bill is expected to be sent to U.S. President Bill Clinton, who has been supportive of the measure, within the next few days, according to a written statement today from U.S. Representative Christopher Cox, a California Republican who introduced the bill in the House. The bill could be signed into law by the president as soon as Monday, the statement said.

The Senate also had debated removing from the bill a "grandfather" provision that allowed states that presently tax Internet access to continue doing so. The version that won approval allows those states to continue collecting existing taxes, but they are forbidden from passing additional levies related to the Internet.

The most recent form of the bill also addresses international trade issues, directing the president to push for the Internet as a global free-trade zone when he deals with other nations.

The bill also creates a temporary commission to study electronic-commerce tax issues and give a report on that study to the U.S. Congress.

Nancy Weil writes for the IDG News Service in Boston.

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