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Washington Prowler

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The ITM is set to expire on November 1st, which would then allow about 15,000 state and local taxing authorities to place new taxes and fees on people's access to the Internet and Internet-based services, like e-mail, instant messaging, video downloads, even VoIP calls.

"Estimates put the total level of taxation at between $3 billion and $4 billion a year in new taxes on consumers," says a staffer on the Senate Commerce Committee. "This would be the first broad-based tax on consumers since the Democrats took control of Congress. And Democrats probably thought they could get away with it because all they had to do was sit on their hands and let the moratorium expire on Halloween night."

But McCain and Sununu, who both support making the tax moratorium permanent, chose to put up a more public fight.

On Thursday afternoon, the two held a press conference calling on the Democrat-controlled Congress to act. But the two didn't notify Reid or the Commerce Committee Chairman Daniel Inouye.

According to a Reid leadership aide, the Senate leader became concerned that Democrats would take a hit for the tax increase. Just before the press conference he put out a statement supporting extension of the ITM, but leaving it ambiguous as to whether it should be permanent of not. Inouye, sent out an even more lukewarm statement after the press conference.

"The reality is some folks just assumed that the ITM would be extended," says a House Republican leadership aide. "Now we have to put the pressure on these folks." (The Internet Tax Moratorium has been extended on two different occasions since it was signed into law in 1998.)

One concern: the House bill must clear the Judiciary Committee chaired by the Rep. John Conyers (D-MI). "We don't know what his thinking is right now," says the House leadership aide. "He's been supportive in the past, but the bill seems stalled there right now."

topics:
Taxes, Harry Reid, Islam, Law, Iraq