FCC backs away from taxing the Internet

One thing that most Americans have in common is that they have no support for new taxes. The FCC is reportedly backing away from a proposal that would add a new tax on broadband Internet service due to public outcry. Public outcry on the issue has left FCC Democrats and Republicans pointing the finger at each other for floating the idea to begin with.

Robert McDowell, who happens to be the only Republican on the FCC commission, has rejected the idea that he supported taxing the Internet. He went so far as to say that he is unsure that the FCC has the legal authority to tax broadband service. The row started when the FCC was urged to broaden the base of contributions that flow into the Universal Service fee.

In the past money in the fund was used to pay for phone service for the poor. With more and more people not using traditional home phones, the funds going into the service have significantly shrunk. Last year, the Universal Service Fund was overhauled and turned into the Connect America Fund, which would also use money to subsidize the construction of broadband networks to American communities that lack them.

Obviously, if the FCC wants to broaden the base of contributions into the Connect America Fund, services not currently taxed would have to be taxed. One unnamed FCC official has stated that broadband is the biggest and most obvious option for expanding the base. However, a spokesman for FCC Chairman Genachowski says that he is skeptical about a broadband tax because it may discourage people from adopting broadband.

[via TheHill]