Activists Clamor To Keep Internet Tax-Free

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Peter Fricke Contributor
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Activists continued to press for congressional action on Internet taxation Friday, hoping for a vote in the lame-duck session.

A coalition of trade associations sent a letter to congressional leaders in both parties on Thursday, urging them to pass a permanent moratorium against state and local taxes on Internet access.

The Internet Tax Freedom Act (ITFA) Coalition, which represents “companies that collectively provide Internet access services to over 275 million broadband, cable, and wireless subscribers nationwide,” claimed that passing the ITFA before the current law expires on Dec. 11, 2014 “will encourage economic growth by enabling more citizens to innovate and engage in today’s digital economy.”

If Congress fails to act, the letter warns, consumers could face “excessive sales and communications taxes, at rates averaging double the general business sales tax rate, expanded to Internet services,” from web browsing to email. (RELATED: Costly Internet Tax Could be on the Horizon)

Even a 10 percent increase in price, according to a study by the Phoenix Center cited in the letter, “would reverse six years of broadband adoption gains.”

In an associated press release, USTelecom President Walter McCormick said, “Passage of this legislation will help promote economic growth and innovation while continuing to support affordable Internet access.”

“Keeping Internet access free from state and local taxes has been a fundamental principle since the Internet was introduced to American consumers,” added Michael Powell, president and CEO of the National Cable & Telecommunications Association.

There have been efforts in both chambers during the current Congress to pass versions of ITFA, and although the House bill passed easily by a voice vote, the Senate version remains stuck in committee despite having secured 53 co-sponsors. (RELATED: Congress Mulls Internet Access Taxes for Millions of Americans)

A different Senate bill, which some have blamed for holding up the vote, combines a ten-year extension of ITFA with another bill, the Marketplace Fairness Act (MFA), which would allow states and cities to collect sales taxes on out-of-state Internet purchases.

Although the letter never mentions the MFA directly, it clearly implies that the Coalition would like Senate leaders to bring a standalone version of ITFA, which has the support of a majority of senators, to a vote, rather than trying to build support for a combined bill, which is more controversial. (RELATED: We Might See HUGE Taxes Just for Using the Internet, Thanks to Harry Reid)

However, Jason Brewer, VP of communications and advocacy for the Retail Industry Leaders Association, which supports both ITFA and MFA, told The Daily Caller News Foundation that, “Given the short window for voting in lame duck, we believe it makes sense to solve both of these issues simultaneously,” adding that Congress should “finish its work this year.”

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