The FCC has been getting involved in the issue because of the move towards VoIP. If VoIP is finally ruled to be an Internet service--preliminary federal court decisions support this stance--then it is unlikely to be taxed, taking away substantial tax revenues from the states and local governments, which currently tax POTS (plain old telephone service).
Lobbyists for state and local agencies opposing a permanent ban on taxation have signaled their support for a two-year extension on the ban, but they are adamantly opposed to a permanent ban. In supporting the two-year extension, the National League of Cities in a statement said the extension would provide "Congress, the FCC, state and local governments, and participants in the marketplace, time to identify and define new technologies and address how they should be treated with regard to current taxation laws."
On the other side of the argument is a group of Senators and Congressmen committed to keeping the Internet permanently tax-free. "The Internet has flourished," said Senator John Ensign, R-Nevada, in a statement, "largely because government has stayed out of the way and allowed private enterprise to drive it economically. It should not be looked upon as a new crop to be harvested by governments looking for additional tax revenue."
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