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Yesterday, Chairman Goodlatte (R-VA) and Representatives Eshoo (D-CA), introduced the Permanent Internet Tax Freedom Act. This proposal is designed to ensure consumers’ access to broadband is protected from onerous local taxes and fees by permanently extending the 1998, The Internet Tax Freedom Act (ITFA) ban on state and local taxation of Internet access service. This moratorium which is set to expire in 2014 would be made permanent by Chairman Goodlatte’s bill.
The initial reaction to the new House bill was positive from several groups. The Internet Tax Freedom Act Coalition, a partnership of businesses, associations and consumers dedicated to the growth of the Internet economy commended the bill’s cosponsors.
The initial reaction to the new House bill was positive from several groups. The Internet Tax Freedom Act Coalition, a partnership of businesses, associations, and consumers dedicated to the growth of the Internet economy commended the bill’s cosponsors.
“We commend Chairman Goodlatte and Representative Eshoo for their leadership on this important piece of legislation” said Annabelle Canning, executive director of the ITFA Coalition in a press comment. “A permanent extension of ITFA will encourage continued adoption of broadband and protect consumers from having multiple and discriminatory taxes imposed on their online purchases.”
CTIA President and CEO Steve Largent argued in a statement that the moratorium is a necessary step towards ensuring technological development.
“The Permanent Internet Freedom Act permanently extends the moratorium on Internet access taxes and fees and provides a tax certainty that will continue to foster American technological innovation, growth and leadership in electronic commerce,” said Largent. “Affordable wireless broadband is no longer just a modern convenience, but a vital component in the lives of American consumers and businesses. From education to healthcare to commerce, a reasonable and permanent tax structure that guarantees affordable access to the Internet and the incredible services it provides is vital for consumers and continued innovation.”
An increase in Internet access taxes would hit broadband users everywhere for billions of dollars of new government spending, placing an unnecessary burden on consumers in order to do something the market is already handling quite effectively. Making the Internet access tax moratorium permanent would help broadband access and development expand while reducing the need for more government broadband spending. Cheap and reliable access to the Internet, allowed in part by the moratorium was one of the key forces behind the quick ascendance of the Internet and the online economy.
Supporters of the moratorium have argued that restricting federal, state, and local governments from adding new taxes and fees to Internet access is important because it prevents ISP bills from turning into phone bills and becoming another cash cow fueling government spending. Wireless phone bills have become a frequent target for new fees and taxes, funding any number of new programs. The national average tax on wireless service currently tops 17 percent, more than double the 7.3 percent average tax on other goods and services. In some states, wireless service taxes top 20 percent.