Bush Signs Internet Access Tax Ban Into Law

By Andy Sullivan

WASHINGTON (Reuters) – President Bush signed a bill that renews a ban on Internet access taxes on Friday amid praise from lawmakers and trade groups who said the measure would encourage more people to sign up for high-speed broadband service.

Bush said repeatedly on the campaign trail this year that a ban on access taxes is crucial to reach his goal of universal broadband access by 2007, enabling more Internet users to download video, music and other bandwidth-intensive content.

The ban on access taxes, in place since 1998, expired more than a year ago when congressional lawmakers could not agree whether to make it permanent or merely extend it for three years.

Backers at the time warned that Internet use could suffer if tax-happy states imposed new surcharges on the monthly fees that Internet providers like America Online Inc. charge their customers.

But some senators said the ban would require states to raise taxes in other areas to make up for the millions of dollars they stand to lose as telephone service and other taxable activities migrate to the Internet.

No states or local governments imposed new Internet taxes during the year the ban was not in effect.

Congress approved a compromise last month that extends the ban until 2007 and extends it to cover broadband service. Existing broadband taxes will be gradually phased out.

“It’s an important step forward in bridging the economic digital divide,” said Sen. George Allen, a Virginia Republican and a bill sponsor who attended the signing ceremony at the White House complex.

“This measure will help make sure for those of lower income and those who live in small towns and rural areas that they can get connected more easily to broadband,” he said.

Broadband costs between $30 and $50 per month, compared with as little as $9.95 per month for regular dial-up access.

Roughly 25 percent of U.S. adults have broadband access, up from 14 percent in 2002, according to the nonprofit Pew Internet and American Life Project. Overall Internet use during the same period has held steady at around 60 percent.

Several technology-industry trade groups also praised Bush’s action.

(Additional reporting by Jeremy Pelofsky)

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