WSJ: A National Telephone Tax? Governors are eyeing your Internet calls.

Wall Street Journal ^ | December 22, 2004 | Editorial

[OESY]

Much of the Washington press corps was preoccupied last week with the White House economic proposals, which are about allowing people to keep more of their money. Meanwhile, the National Governors Association was across town hosting a separate gathering that focused on just the opposite.

The NGA -- along with its buddies at the National Conference of State Legislatures, the National League of Counties, the National League of Cities and the U.S. Conference of Mayors -- desperately wants to tax Internet use. And they're hoping that Internet phone calls... will pave the way.

You're forgiven if you thought this was settled last month when President Bush signed the Internet Tax Non-Discrimination Act. But that law merely extends through October 2007 the current moratorium on taxing things like Internet access; or taxes by multiple states of a product or service purchased online; or taxes that treat Internet purchases differently from other types of sales.

State politicians have their sights on bigger game. They want the Internet classified as one giant telephone for tax purposes. That's because telecom levies are some of the highest in the country, averaging 17.9%, according to the Council on State Taxation, and producing a cool $20 billion or so every year for state and local coffers.

In a good call last month, the Federal Communications Commission excluded VOIP -- the new technology that allows consumers to place calls over the Web -- from state regulation. Unfortunately, the agency was silent on the issue of taxes and fees, and states have taken that silence as a cue to go on the offensive....

Since the Internet is making everyone more productive, it deserves some credit for the economic growth that has led to greater tax collections. Taxes are unlikely to help this trend, let alone encourage faster broadband deployment....

[Pete]

I have Comcast. Makes sense to use cable modem if you can since you have to pay the phone company for DSL, which reduces your savings associated with VoIP.

When I switched to Vonage, I got rid of dial-up Internet with Earthlink, 2 local lines with Verizon, and long distance with AT&T. I added high speed internet service via cable modem with Comcast. The money I saved paid for the cable TV, which I did not have before making the switch.

[angkor]

You do need the line for DSL, but not services. It's called "dialtone only", and doesn't give you even local telephone service (but should provide 911). The line is just to carry DSL.

In any case the DSL and VOiP boards are saying that Verizon also will not "bundle" dialtone-only and DSL. They force you to take local service at a minimum.

I'm not gonna' complain about it, because the cost of minimal Verizon service + Vonage is still a bit less than my current Verizon bill. And Vonage provides better services and lower LD rates.

[Polyxene]

If Bob-The-Taxman-Taft was at the National Governors Assn. meeting, you can bet it was his idea!! He has levied a tax on everything here in Ohio! When I got my safe deposit box rent invoice, there was a $5.00+ charge for taxes! He is a RINO of the first degree!

[angkor]

Unfortunately I'm on a private cable TV system with no IP available.

I'll still get better services and a dramatically lower LD bill from Vonage. Enough to pay 100 percent of the DSL bill *and* save about $100 per month on international LD.

[Savage Beast]

I'm afraid you're right, but by then, Europe will be Islamic.

Unfortunately, the Europeans lack the will to survive.

One can't help wondering if millions of people in the West have a cultural death wish.

[Rakkasan1]

when I worked in a customer contact aspect of the phone company people would often ask "what's this Universal Service Fund and why do I have to pay it?"

I would explain and usually end by telling them to call AlGore to complain.