VoIP Tax Exemption Loses

VoIP received a blow this past Friday in Colorado when a bill to exempt VoIP service from being taxed narrowly missed being passed. As this article points out, taxing VoIP on an Internet connection that is already taxed is the equivalent of putting a stamp on every e-mail and worse is double-taxation.

Please see the following quotes from politicians who see why taxing VoIP is a bad idea.

Rep. Jim Sullivan, R-Larkspur, said businesses will notice if the bill fails and will be more reluctant to relocate to Colorado.

"It would be a very negative message to companies – that Colorado isn’t pro-business," Sullivan said.

Rep. Mark Cloer, R-Colorado Springs, said the tax would especially hurt low-income people who can’t afford both phone service and Internet access.

The final vote showed 32 in favor of a tax exemption for VoIP, and 30 against, with three lawmakers excused. A bill needs 33 votes to pass the House.

It seems the reason this bill lost is due to the states need for revenue. It seems that politicians voting against the bill see why VoIP shouldn’t be taxed, they just don’t care. There really aren’t any strong VoIP lobbies at the moment to fight for the right of VoIP to remain tax-free in Colorado. Currently, Florida is the only state to exempt VoIP from taxes.

  • Bryon
    February 5, 2006 at 4:55 am

    The state leglistartos have to figure out that the customers will go to the componies that provide are combination of good service with cheep rates and the componies will go to the states where they can run their business the best. So if states want to run voip providers out of their state then they should not start taxing the providers. Two more thing some providers are probably paying for these telecomunication fees if they rent t1 lines. Also it depends how they are setup, becuase some of the calls might not be hitting PSTN lines at all and could be going from one voip provider to another and then the billing would start to become a nightmare.

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