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Subject: [IP] Government study: VoIP, video can be taxed

  • From: David Farber <>
  • To:
  • Date: Fri, 27 Jan 2006 14:10:27 -0500

Begin forwarded message:

From: Bob Frankston <>
Date: January 27, 2006 1:46:10 PM EST
Subject: RE: [IP] Government study: VoIP, video can be taxed

The whole idea of laws about the Internet is problematic since it's an idea
rather than a thing. If I use IP protocol over a modem is that &quot;The

This is what bothers me about the whole discussion of &quot;taxing the Internet&quot;
-- one needs to be more specific. How is Internet commerce different that
800 number commerce?

The real danger is that in the zeal to tax everything every nascent
innovation is subject to death by taxation. We see this in economies
strangled by a high tax on phone calls.

Taxing VoIP is an example of this. Companies like Vonage that sell VoIP as
if it were traditional telephony have an identifiable product. One argue
about taxing such a product whatever the transport is.

More worrisome is taxing SIP-based telephony that is entirely at the edge
with no server. Or, for that matter, demanding a first class stamp on Email
(as one Congressman supposed wanted to do).

Even more problematic is the concept of &quot;access&quot; to the Internet when we're
using IP protocols within our homes with the connections to others being a
matter of a routing path and nothing more.

Next you'll see attempts to tax premium electrons at a higher price and a
ban on pornographic electrons.

One more reason for assuring that connectivity is fundamental and available
without being wrapped in a value-added service.

-----Original Message-----
From: David Farber []
Sent: Friday, January 27, 2006 08:31
Subject: [IP] Government study: VoIP, video can be taxed

Begin forwarded message:

From: Kurt Albershardt <>
Date: January 27, 2006 12:31:35 AM EST
Subject: Government study: VoIP, video can be taxed

By Anne Broache
URL: <>

State and local governments may be able to tax certain aspects of
Internet use under an existing federal law designed to ban such fees,
government auditors said this week.

The comments came in a new Government Accountability Office study < 2Fd06273.pdf&siteId=22&oId=2102-9588_22-6031256&ontId=9588&lop=nl.ex> commissioned by Congress to examine a law known as the Internet Tax Freedom Act.

First passed in 1998 and renewed after some debate in 2004, the law
prevents state and local governments from taxing &quot;a service that
enables users to access content, information, electronic mail or
other services offered over the Internet.&quot;

Services like voice over Internet Protocol (VoIP), traditional
telephone service and video offerings by Internet service providers
remain fair game for taxation under the law, the GAO said. The scope
of the moratorium has nothing to do with sales taxes for Internet

At issue is the auditors' finding that the tax ban doesn't apply to
&quot;acquired services&quot;--in short, the actual wires, cables, fibers and
other hardware used to carry Internet traffic to customers. That
means an Internet service provider that leases fiber from a
telecommunications company for its network could theoretically be
subject to taxes during that &quot;wholesale&quot; transaction.

&quot;We acknowledge that others have different views about the scope of
the moratorium,&quot; the report said. &quot;Congress could, of course, deal
with this issue by amending the statute to explicitly address the tax
status of acquired services.&quot;


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