The US House passed a bill late Tuesday permanently barring local and state taxation on Internet access. A temporary ban on that expires October 1, but the Permanent Internet Tax Freedom Act faces uncertainty in the Senate.

Similar measures have been approved by the House and Senate five times since 1998, but political jockeying could end that streak or produce a watered down version.

The measure, however, does not end those pesky taxes on communication services like telephone bills. Instead, it makes it unlawful to impose similar taxes for Internet access—taxes that many of the financially strapped states and cities are demanding for the right to impose.

One of the bill's sponsors, Rep. Bob Goodlatte, a Republican from Virginia, said on the House floor that the Federal Communication Commission's net neutrality rules would only "embolden" states to tax Internet access:

If the moratorium is not renewed, the potential tax burden on consumers will be substantial. The average tax rate on communications services in 2007 was 13.5%, more than twice the average rate on all other goods and services. The FCC’s recent reclassification of the Internet as a telecom service emboldens states to apply these telecom taxes to Internet access immediately, should ITFA lapse. To make matters worse, this tax is regressive: low-income households pay ten times as much in communications taxes as high income households, as a share of income.

The measure was passed on a voice vote, so individual positions of lawmakers were not recorded.

When the moratorium was first enacted during the Clinton administration, it was done as a move to allow the burgeoning Internet industry to blossom. States that already taxed Internet access—Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin—had been grandfathered in and allowed to tax 'Net access. But under the measure approved Tuesday, those states would no longer be able to collect such taxes. The Congressional Budget Office said that amounts to "several hundred million dollars annually."

The House passed similar legislation last term. But the measure faced resistance in the Senate where lawmakers wanted to pair it with the Marketplace Fairness Act—legislation allowing states to collect sales taxes on online purchases, even if the online retailer is not within the state where goods were purchased. By some estimates, the states are losing about $34 billion a year in sales taxes because of Internet commerce.

The House refused to combine both measures last year, so a compromise among both chambers was worked out—the short-term compromise of which banned taxation on Internet access though this September.

It should come as no surprise that the National Governor's Association is weighing into the fray. The group was "disappointed" again that the House didn't revisit the Marketplace Fairness Act. According to the association's executive director, Dan Crippen:

We are very disappointed that the House of Representatives has chosen to take up the Permanent Internet Tax Freedom Act before discussing the tax issue of greatest importance to states: the need to create parity between in-state and out-of-state retailers regarding the collection of state and local sales taxes. Governors maintain that before any federal legislation regarding state tax legislation is passed, Congress should first address this disparity. States want to work with Congress to craft thoughtful structural change that will help bridge the gap between the physical economy of the 20th century and the digital economy of the 21st century. The first step is to address the collection of state and local sales taxes.

As the October 1 deadline looms, the political solution looks like another short-term extension of the ban on Internet access taxation.