The House Judiciary Committee voted 38-0 yesterday to approve a bill extending the moratorium on the taxation of Internet access, due to expire Nov. 1, for four years, through November 2011. In an OMBW Watcher on the issue published yesterday, Internet Access Tax: The Immodest Moratorium, we noted House hyperbole about the impact of such a tax. The Judiciary Committee's ranking member, Rep. Lamar Smith (R-TX) offered his own yesterday: If Congress allows the tax moratorium to expire, Americans could face taxes of up to 20 percent for simply accessing the Internet. That's the equivalent of taxing a shopper at the local mall 20 percent for just walking through the door. Surely the Congressman is aware that the internet access tax is not a sales tax, and that no state's current internet access tax exceeds nine percent. The bill would also:

• extend grandfather provisions, preserving taxes imposed prior to 1998
• phase out states that claim to be grandfathered in as a result of the Internet Tax Nondiscrimination Act of 2004
• create an exemption for states that have enacted laws structuring their gross receipt taxes to be a substitute for state corporate income taxes that are not taxes on Internet access
• define "Internet access" to ensure that related services such as e-mail and instant messaging are free of state and local taxes; internet video and phone services, however, would be open to taxation

Despite the Committee's unanimous vote, the future of the bill remains uncertain. 240 House members back another bill by Rep. Anna G. Eshoo (D-CA), H.R. 743, to establish a permanent moratorium. Meanwhile, Senate leaders have offered a bill, S. 1453 sponsored by Sen. Tom Carper (D-DE), providing a six-year extension of the ban.