Politics & Policy

End the Threat of Internet Access Taxes


The U.S. Senate will soon vote on whether to permanently ban Internet-access taxes. Congress enacted the ban in 1998, and there have been nearly a half-dozen renewals since then. Senator John Thune (R., S.D.) has done present and future taxpayers a great favor by leading the fight to include it in the upcoming customs bill.

Members of Congress from both parties have voted again and again against the taxation of Internet access. In the U.S., public support for tax-free Internet access is overwhelming. The world agrees. Last year tens of thousands of Hungarians filled the streets to forestall their government’s attempt at imposing Internet-data taxes.

So why has this common-sense legislation, which enjoys bipartisan majority support in both the House and Senate — and popular support in the nation — languished year after year? In the case of the Permanent Internet Tax Freedom Act, the bill is a hostage. Its virtue as sound law and its popularity are exactly what have doomed it to legislative limbo. Until now.

For more than 15 years, Congress held the threat of taxing Internet access over the heads of the American people, routinely passing short-term temporary bans on state and local access taxes, but refusing to permanently close the door on what amounts to taxing interstate commerce. Ironically, the most recent holdup was orchestrated by proponents of a new tax scheme on purchases made over the Internet.

RELATED: Dick Durbin Wants to Tax Your Internet

But as 2015 drew to a close, with several pieces of must-pass legislation pending, congressional leaders worked to finally slam the door on Internet-access taxes. The ban wound up in the customs bill, but unfortunately we saw yet another short-term extension. The customs legislation including the ban got pushed into 2016. Nonetheless, it appears that we will finally get a vote in the Senate sometime in the few next weeks.

Though support of the ban is bipartisan and widespread, some senators, led by Majority Leader Harry Reid (D., Nev.), are fighting hard to pull this provision out of the customs bill, either because they oppose the ban outright, or because they prefer to hold it hostage so they can pass other tax increases (like the new scheme for taxing Internet sales). Or both. These senators are mounting an effort to strip the ban out of the customs bill when it comes to the floor.

This time, however, when these senators try to stop the Internet-access-tax ban, they will be on record. Through their public vote to strip the permanent ban out of the bill, Americans will know where each senator stands, and it’s going to be tough for anyone in any red or purple state to explain away a vote for allowing Internet-access taxes.

#share#New technologies that depend on Internet access are created every day. If our digital economy is to continue to thrive, it is imperative that Congress quit playing games with what has become an absolute necessity to business, education, entertainment, and basic communication.

One of the greatest barriers to Internet access is cost. For example, a tax that increased the price of Internet access by just 1 percent would reduce demand for Internet access by 2.75 percent, according to an estimate by former White House Chief Economist Austan Goolsbee.

RELATED: Stop the Streaming Tax

This new burden would disproportionately fall on low-income Americans. Households of lesser means could pay ten times more of their income than they do now for access. Many families would see their access to the Internet limited, or they might even be shut out altogether.

It is past time for Congress to rule out the threat of Internet taxation. Ever since I served on the Advisory Commission on Electronic Commerce back in 1999, I’ve been arguing that we need to make the ban permanent. Our innovation economy and the American people deserve complete certainty that Internet access won’t be taxed.

Senators should vote against stripping the permanent Internet-tax ban out of the customs bill. They must ignore protests from their colleagues who want to retain the uncertain status quo as leverage in some other fight. It’s time to free the hostage.

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