Internet Tax Ban: Down to the Wire?

By September 21, 2007Innovation, Taxation

The federal ban on taxing Internet access is set to expire on October 30th. The freedom from taxation has helped create a dynamic Internet with low entry costs, responsive to the demands of the marketplace. So what’s taking Congress so long in making the ban permanent?

Senator Ron Wyden (D-OR) weighed in on the topic Thursday, while three Republican Senators held a news conference to push for a permanent ban. If the ban expires, state and local governments will impose taxes, sure as shootin’.

If Congress makes the ban permanent, nothing would stop Internet providers from trying to expand the number of untaxed services, David Quam, director of federal relations for The National Governors Association, said in June. “The temporary provision keeps everyone honest,” Quam said then.

But Senator John Sununu, a New Hampshire Republican, argued Thursday that a permanent ban is needed. If there’s a problem with bundled services, that can be worked out in the bill, he said.

The Internet is “critically important to interstate and global commerce,” Sununu said. “It makes no sense to have a national and global communications and business network to be subject to taxes by every state, city and county in the country.”

Right. Also, for years and years now, we have heard about the deletrious effects of the “digital divide,” the lack of Internet services for poor and rural communities. If a member of Congress is serious about addressing that issue, then he should get behind the permanent ban.

The NAM has sent a letter to the House and Senate endorsing the permanent tax moratorium. To read the letter on H.R. 743, the Internet Tax Freedom Act, please click here.

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