Legal Issues

by Mike Masnick

Slowly, But Surely, Politicians Turning VoIP Into A Taxable Entity

from the and-so-it-goes... dept

Some politicians have been trying anything possible to come up with ways to tax VoIP systems, even if those taxes don't necessarily make sense. While the FCC has done it's best to stop state level taxation, it also used it's "quacks like a duck test" to decide that VoIP providers had to get up to speed on 911 services as quickly as possible. It looks like some politicians are pulling out the same test to figure out a way to add Universal Service Fee charges to VoIP connections as well. The idea behind the USF is to subsidize rural telco services, on the theory that it's too expensive otherwise for those areas to be served. The politicians backing this bill says it's necessary to tax VoIP to have the USF apply to broadband connections as well. Of course, this seems somewhat arbitrary. VoIP, after all, is just an application on the network. It's like saying they should add a special tax to every e-commerce transaction you make or every song you download (though, some are trying to do so) to support the USF. The only reason it seems more palatable when it's VoIP is because VoIP quacks like regular telephone service. This is really just some politicians' way of getting around the laws that ban the taxing of internet connections -- something that's been controversial for a long time. So, they figure, if they can't tax internet connections, why not tax the applications on top of the connection. Unfortunately, though, that opens up plenty of potential applications for politicians to tax once they realize the opportunity.

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  • identicon
    bunk, 3 Aug 2005 @ 12:11pm

    I thought VOIP was free?

    YIM-Teamspeak-Skype-MSN all have voice over IP ... and are free. How do you tax something that is free?

    reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 3 Aug 2005 @ 12:36pm

      Re: I thought VOIP was free?

      They're really talking about telephone replacement VoIP (like Vonage and Time Warner's digital telephony offering). Those meet the "looks like a duck" test.

      However, from the article, it sounds like the law may be broadly worded such that it could apply to those other free offerings -- though, the uproar would almost definitely force them to clarify.

      reply to this | link to this | view in chronology ]

      • identicon
        Adam Courchesne, 1 Jun 2006 @ 11:23am

        Re: Re: I thought VOIP was free?

        No doubt, if they did tax vonage etc, people will just start migrating over to other free services. And like P2P sharing, if the government decided to tax free services like Google Talk, Skype etc, there would be a slew of underground apps that would allow you to do the same thing.

        reply to this | link to this | view in chronology ]

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