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Republican senator predicts permanent Net tax ban will pass

Gordon Smith, chairman of the Republican High Tech Task Force, says despite obstacles, he's confident Congress will act on a soon-to-expire ban on Internet access taxes.

Congressional action on a soon-to-expire ban on Internet access taxes may be slow going at the moment, but members of the head of the Senate Republican High Tech Task Force says he believes there are enough votes to make the law permanent.

"People use the Internet to access information and purchase goods and services," Sen. Gordon Smith (R-Ore.) said in a call with reporters on Thursday morning. "It is not appropriate to tax someone for walking into a library or a shopping mall. On that rationale, we should not be taxing the Internet."

If Congress lets the moratorium expire as scheduled on November 1, many states would, at least theoretically, be free to levy new taxes on digital subscriber line, cable modem, wireless and even BlackBerry-type data services. (There are exceptions, of course: Some, such as Colorado, already have state-level bans in place, and a handful are already allowed to continue such taxes that were imposed before the federal law took effect several years ago.)

What's less clear is how much weight to place on Smith's optimism about a permanent ban's chances of passsage. Regardless of what the Republican leaders say, the reality is that it has seemed less and less likely in recent months that the ban will be made permanent this time around.

That's in large part because of longtime resistance to that idea from the lobbying forces of the National Governors Association, which says it wants to protect the option of taxing if future needs arise. A compromise route--described recently by the NGA's top lobbyist and an alliance of telephone, cable and Internet companies that supports a permanent ban--appears likely to involve another temporary extension of the moratorium.

Although Thursday's call was staged by Republicans, the push for a permanent Internet tax ban isn't exactly partisan: Rep. Anna Eshoo (D-Calif.), who represents a Silicon Valley district, is the chief proponents of the House's version of that proposal, and other Democrats, particularly those who represent high-tech-heavy districts, have also signed on. Nor are all Republicans fond of a permanent tax ban--three Republicans so far have co-sponsored a competing measure that proposes a four-year extension.

Another question that remains is whether Congress will act before the current law lapses. Just last week, a top House aide said some unrelated issues were holding up action on a final bill in that chamber.

As for the Senate's progress, Smith acknowledged that obstacles, such as debate over the Iraq war, have been standing in the way. He couldn't resist pinning the responsibility on the Democratic leadership to "bring up the bill and make this a priority."

Update at 10:05 a.m. PDT: In a press release shortly after the Republican call, Senate Majority Leader Harry Reid pledged support for extending the moratorium--but was mum on the question of whether it should last forever.

"I have every expectation that Congress will approve a continuation of the moratorium," he said. "This has received bipartisan support in the past, and I expect that to continue."

Update at 11:45 a.m. PDT: Now Sen. Daniel Inouye (D-Hawaii), chairman of the Senate Commerce Committee, which oversees Internet policy, is predicting his committee will act as soon as next week on an extension of the Net tax ban. But like Reid, he's not advocating--at least openly--a permanent adjustment.

"I remain hopeful that pragmatism, and not politics, will prevail and that my colleagues can agree upon reasonable legislation that can be marked-up next week, and thereafter, sent to the president's desk," Inouye said in a statement.