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Since 1998, the Internet Tax Freedom Act has imposed a moratorium on state and local taxation of Internet access and the creation of discriminatory taxes on emails and other data. The current moratorium, which is set to expire in 2014, was designed to promote the growth of the Internet by keeping the cost of Internet access low and affordable. The ban on Internet access taxes has been a rousing success and is one of the factors responsible for the meteoric rise of the Internet and the digital economy.
A new proposal from Senators Ron Wyden (D-OR) and John Thune (R-SD) currently being considered in Congress, the Internet Tax Freedom Forever Act, would make the moratorium on Internet access taxes permanent. The Act also keeps state and local governments from imposing multiple and discriminatory new taxes on digital items like digital apps and music like many governments have begun to do with wireless phone service. Supporters argue that making the internet access tax moratorium permanent is a necessary step in promoting wider access to the internet while keeping the cost of access down and eliminating discriminatory taxes.
As the internet has become one of the driving forces behind economic growth across the United States, ensuring affordable internet access for businesses and consumers is crucial, Senator Wyden argued in a statement. “As the Internet Tax Freedom Act enabled and promoted Internet access and adoption across America, the Internet became a platform to facilitate global commerce, sparking nothing short of an economic revolution,” said Wyden. “Keeping the Internet accessible to consumers encourages innovation and investment in our global economy,” added Senator Thune.
A new coalition of communications companies, business associations and consumer groups recently joined together in an effort to support legislation that would make ITFA permanent. The new group, the Internet Tax Freedom Act (ITFA) Coalition, voiced their support for the Internet Tax Freedom Forever Act and emphasized the importance of affordable internet access for the growth of the Internet economy.
“The Internet has become an integral part of almost every aspect of our daily lives over the past fifteen years and is one of the largest drivers of the U.S. economy today,” said Annabelle Canning, executive director of the ITFA Coalition in a press statement. “The steady increase in broadband adoption rates, as well as ever-expanding choices of online services and e-commerce offerings, underscore the need to keep the Internet Tax Freedom Act in place. A permanent extension of ITFA will maintain affordable access for all consumers and encourage the next generation of innovators and investors to build upon the expansion of the Internet ecosystem that we have witnessed over the last decade.”
A Heartland Institute Research & Commentary on the Internet Tax Freedom Forever Act is available here.