Senator Seeks To Quash Potential Internet Tax

The federal excise tax on communications (FET), established in 1898 to fund the Spanish American War, is still on the books and looming as a tax on Internet access, but U.S. Senator George Allen (R-VA) introduced legislation Monday to ban the tax from being leveled on the Web.

At 3 percent the tax is still onerous in its application to local and long distance calls, but it's better than the 25 percent charged during the Second War.

"When the temporary tax on telephones was passed in 1898, there were just 1,300 telephones " they really were a luxury item," said Senator Allen in a statement at a congressional briefing sponsored by the Computing Technology Industry Association (ComTIA). "Outdated taxes like the FET stop Americans from using new, innovative and increasingly integral Internet services like VoIP."

Allen played an instrumental role in promoting and passing the Internet Tax Moratorium, which prevents states from taxing Internet access. Congress' Joint Committee on Taxation has been looking into the pros and cons of applying the FET to all Internet communications including e-mail, Web video conferencing, data traffic and VoIP.

"We didn't win the Spanish American War to have our own government 'federales' burdening Americans with taxes on innovation over 100 years later," added Allen.