Once again the Permanent Internet Tax Freedom Act has been introduced in the House of Representatives, this time because the last temporary extension, passed in December, will expire on October 1. The bipartisan legislation bans taxes on Internet access permanently and disallows multiple or discriminatory taxes on Internet activities. If allowed to expire, states would begin to collect taxes on Internet access, or apply other discriminatory taxes that may already be in place in the state but which have been held at bay during the moratorium.
According to Scott Mackey, former chief economist for the National Conference of State Legislatures, an average household’s taxes would increase by $50 to $75 each year if states apply their sales or telecommunications taxes to Internet access. While that doesn’t seem like much, keep in mind that that is about what a low-income family spends in a year on subsidized school lunches. Those who qualify for such programs are exactly those who will be most negatively affected by a lapsed moratorium.
And those taxes are discriminatory. Since taxes are already being paid on the infrastructure that is delivering broadband, adding a new tax is merely a multiple tax, and hence discriminatory. Fortunately, for 17 years, as the moratorium has continued to be extended, the country has continued a policy of keeping the Internet free of multiple or discriminatory taxes to the benefit of all families.
Today, we also have a clear national mandate to expand broadband use. The addition of discriminatory online taxes would drive down online purchases, and additional access taxes would decrease adoption of broadband. However, permanently wiping out the many exceptions made to the ban over the years would eliminate discriminatory access taxes, which would actually encourage broadband adoption.
One would think that immediate passage of a permanent moratorium would be a foregone conclusion given the consensus that broadband across the nation is a good idea. Those taxes discriminate against certain technologies and business plans and ultimately fall heaviest on those least able to bear the burden.
Congress has a clear choice: Make complete and permanent the ban on Internet access and multiple or discriminatory taxes online, encouraging broadband access and e-commerce, or turn away from that national priority and allow the pro-tax thugs to loot our digital future.
January 21, 2015