WASHINGTON, D.C. — A growing number of lawmakers and interested observers are taking a closer look at S.150, the "Internet Tax Non-Discrimination Act," and finding serious problems with what they see, a coalition of local governments said today.

"What they are discovering is that provisions within the bill would give the telecommunications industry a means by which to avoid taxes they traditionally have paid," said Montgomery County, Maryland, Council Member Marilyn Praisner. "That's bad policymaking, and it's unfair to states and local governments that are relying on this tax revenue at a time of increasingly worrisome budgetary constraints."

Council Member Praisner, who chairs the TeleCommUnity Alliance, said the local government coalition does not object to a simple extension of the Internet tax moratorium but is strongly opposed to expanding the types of services and companies that are exempt from taxes.

"Contrary to claims we hear repeatedly -- and as recently as today -- local governments do not want to tax e-mail or tax 'surfing' the Internet," she said. "We simply want to preserve our existing rights to collect fair rent for the public's rights-of-way and to use broad based and nondiscriminatory taxes to support local government's first responders, make local infrastructure investments and operate our schools."

TeleCommUnity noted that growing opposition to expansion of the Internet tax moratorium transcends party lines.

It praised Sen. Lamar Alexander (R-TN), for example, for warning his colleagues that unless they "want to transfer responsibilities for local schools, colleges, prisons, sate parks and roads to Washington DC," they should not dictate to state and local governments how they can pay for legitimate services.

The Alliance also lauded Virginia Gov. Mark Warner, himself a former businessman in the telecommunications industry, for outlining his objections to the bill. The governor has said that, as more services are bundled together like wireless and Internet access, he is concerned that any permanent ban on Internet taxation not further remove current revenue sources from already stretched state and local governments.

The National Governors Association, meanwhile, said in a letter to Senate leaders that the legislation "would unnecessarily expand the scope of the existing moratorium by adding certain state and local telecommunications taxes to the definition of tax-free Internet access."

And a recent Washington Post editorial that said: "What's driving this legislation is that telecommunications companies and Internet service providers see an opportunity not only to make the tax moratorium permanent -- in itself a bad idea -- but to save what could amount to billions in additional taxes. ... The last thing Congress should do now to cash-strapped states is pass a law that would not only permanently put Internet access off limits for taxation but also deprive them of revenue that they now collect."

The TeleCommUnity Alliance has asked lawmakers to extend the Internet tax moratorium for 18 months, during which time TeleCommUnity pledges to work with the bill's authors to determine what, if any, additional changes to the moratorium are warranted.

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Read more about S 150 and the local government response here.