When Congress passed a ban on the practice in 1998, the state and a handful of others already collecting the fees were exempted. Last week, lawmakers voted to keep that exemption in a short-term spending bill that expires Dec. 11.
Seven states currently levy the taxes, but the charges will remain illegal in all others. Last year, the state and local governments took in $358 million from the fees, according to the state comptroller’s office.
The current moratorium was set to expire Nov. 1. An extension was rolled into a $1 trillion spending deal meant to avert a government shutdown.
Lawmakers are expected to address the issue again when they return from their two-month recess.
Senate leaders plan to pair a 10-year exemption for Texas and the other states with a proposal to tax online shopping purchases. Currently, states can only collect taxes from sellers with a physical presence in their borders. The Senate bill would allow states to collect taxes on out-of-state retailers.
Some House Republicans have balked at that plan, saying it would burden small retailers. Many state and local leaders support taxing remote sellers, including officials in Dallas.
“We are encouraged that through this maneuver, it will be addressed come December,” said Yejin Jang, associate legislative director at the National Association of Counties.
In July, the House voted to permanently ban Internet access taxes in all states. Most Texans in the House support that legislation, arguing it’s a boon to both technological progress and taxpayers.
“The Internet’s contributions to economic growth and innovation are unmatched,” Corpus Christi Republican Rep. Blake Farenthold said. “I am committed to keeping Internet access largely unencumbered by taxes and government control.”
In Austin, state officials say the state’s budget could easily withstand the loss of the taxes. The fees account for a slice of the state’s $25.9 billion annual sales tax revenue.
The comptroller’s office is closely tracking the issue, spokesman Chris Bryan said.
But banning the taxes could prevent Texas and local governments from future sources of revenue as Internet technology develops.
The state currently collects a 6.25 percent sales tax on Internet access charges that exceed $25. Local sales tax can add an extra $2.
The comptroller’s offices estimates that an average Internet bill is $60, so Texans usually pay $2 to $3 a month in the tax.
©2014 The Dallas Morning News
