U.S. Senate stalls Internet tax ban.

• Position: Ohio

Unable to reach a compromise before the winter recess, the U.S. Senate will consider legislation to extend the moratorium on the taxation of Internet access early this year. Originally enacted in 1998, the moratorium expired Nov. 1, 2003.

Several senators, including George Voinovich (R-OH), were successful in delaying the vote until after the break, and hope to more narrowly define the extension of tax-free Internet access. They are concerned the ban will cost Ohio millions in tax revenue each year, and many states fear the moratorium could be extended to include other services, including Internet-based telephone service.

Ohio is one of a handful of states that is allowed to tax Internet access, though the state does not tax personal access. The collective loss of revenue to states that currently tax any or all Internet access could be between $80 million and $120 million annually. The Congressional Budget...