VoIP no bargain for cities losing phone-tax revenue

NEW YORK — Internet telephony may be one of the best bargains around
for consumers. But it may also be a threat to the economic stability of
cities across the USA.

Once considered a toy for techno-geeks, VoIP is making its way into
the mainstream. The Yankee Group research firm estimates that VoIP will
have close to 30 million users by 2009, up from fewer than 1 million

The problem: Cities have long depended on telecom taxes to help pay for
everything from sewer lines to teachers' salaries. Internet telephony,
considered an "information service," operates largely tax-free.

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