Make Internet Tax Moratorium a Permanent Fix

By September 13, 2007Taxation, Technology

The NAM sent a letter up to Capitol Hill on Wednesday calling for passage of two pieces of legislation — H.R. 743 and S. 156 — to place a permanent moratorium on taxation of Internet services. (The current moratorium expires Nov. 1.

As the NAM’s letters (here and here) explain,

This moratorium, originally enacted in 1998 and extended twice since then, prevents state and local tax jurisdictions from taxing Internet access and imposing multiple and discriminatory taxes on e-commerce. Keeping Internet access tax-free is a key factor in ensuring affordable access to the Internet and promoting further broadband deployment for both individuals and businesses.

The Internet is an essential tool for manufactures of all sizes. Manufacturing is the largest industry sector doing business-to-business e-commerce and manufacturers spent nearly a trillion dollars in 2004 for such cost-saving operations as Just-in-Time inventory management.

If the moratorium is allowed to expire, no doubt some of the 7,000 eligible taxing authorities would seek to implement a tax, and as the truism goes, tax something, get less of it.

Or, as the NAM’s Monica McGuire says, “New taxes on Internet access amounts to turning the information superhighway into a high-priced toll road.” Karen Kerrigan of the Small Business and Entrepreneurship Council has a good analysis of the issues in this column, and Phil Kerpen of Americans for Prosperity considered the broad debate last week here.

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