Congress Can End The Threat Of Internet Taxes In 2015, And They Should

Michi Iljazi Communications and Policy Manager, Taxpayers Protection Alliance
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The November midterm elections are in the rearview mirror and 2015 has begun with a bang, with battles on Capitol Hill taking shape on a variety of agenda items. The new Republican Senate and the emboldened Republican House have a great deal of issues on the table to be dealt with this year, but one in particular could be a major victory for taxpayers: Internet taxes.

Last year was mainly filled with good news for taxpayers on the Internet tax front, but the victories were temporary, reinforcing the need for permanent solutions to ensure stability for millions of American taxpayers, consumers, and businesses that use the Internet on a regular basis. The moratorium on Internet access taxes continues to be a temporary barrier between Internet users and a flood of new taxes. The Internet Tax Freedom Act (ITFA) of 1998 was the first real protection for Internet users against taxes for accessing broadband services, created with the goal of ensuring innovation and commerce through a vibrant Internet.

For the last 16 years the ban on Internet access taxes has continued to be temporary, with Congressional legislation extending the moratorium in 2001, 2004, and 2007. In July of 2014, the Permanent Internet Tax Freedom Act was passed in the House of Representatives on a voice vote, but the Senate’s version did not make it as far in the previous session of Congress. The good news for taxpayers is that after a short term extension in September’s Continuing Resolution, the December “cromnibus” that passed both the House and the Senate extended the ban on Internet access taxes for another year. While a permanent extension of the moratorium would have been ideal, the one-year extension provides more time with a seemingly more taxpayer-friendly Senate and House to finally do what should have been done 17 years ago: ban Internet access taxes for good.

Last Friday, the House once again introduced the Permanent Internet Tax Freedom Act, sponsored by Reps. Bob Goodlatte (R-Va.), Anna Eshoo (D-Calif.), Tom Marino (R-Pa.), Steve Chabot (R-Ohio), and Steve Cohen (D-Tenn.). After passage on a voice vote last year in the House it is likely they will pass the legislation this year. The pressure is now on the Senate to take up its own version to ensure the moratorium is extended permanently, once and for all. Taxpayers are already charged and taxed for Internet services; adding an access tax will add to the laundry lists of consumer concerns and financial obligations.

First, it will take an already complicated tax code and make it increasingly more complicated. There are more than 10,000 state and local jurisdictions that deal in taxing communications services. Should the ban expire, many of these cities and localities are ready to begin collecting; and once the tax is implemented, it will be next to impossible to get rid of.

Second, a tax on Internet access will impact millions of Americans across a wide spectrum in terms of how they use the web. Think about how commerce would be damaged. Schools and colleges with students and faculty that rely on the Internet to achieve their goals for higher education will be impacted. How many of us have smart phones, tablets, TVs, and game consoles that can access the Internet? Adding a new tax solely for logging on would create additional financial burdens for all those individuals.

Middle class families who are already being squeezed in today’s wage-stagnant economy would be hit hard by a new tax on the internet. According to statistics from the U.S. Census Bureau, “In 1997, 18% of US households had an Internet connection. Yet, by 2012, just 15 years later, 74.8% of all US households enjoyed an Internet connection.” That’s three quarters of American households who will have to open their wallets for yet another tax obligation.

The White House and Congress have already started to tangle on a number of issues, resulting in a slew of administration vetoes. But the issue of Internet access taxes provides an opportunity for clear and permanent victory. Congress should move quickly to pass legislation that will permanently ban taxes on internet access and put it on the president’s desk for his signature. The Internet must remain a key driving force that powers commerce in today’s economy. The livelihood of American consumers, businesses, and families depends on it.

Michi Iljazi is the Communications and Policy Manager for the Taxpayers Protection Alliance.