The number of working days remaining in the current congressional session, which ends in December, is quickly dwindling, especially given the mid-term elections and the accompanying politics. On the must-do list should be protecting the Internet from multiple or discriminatory taxes, a process Congress began in 1998. The current moratorium will expire in exactly six months; without congressional action, consumers will be exposed to increased costs in accessing and using the Internet.
Both the House and the Senate have introduced legislation—the Permanent Internet Tax Freedom Act and the Internet Tax Freedom Forever Act, respectively—to permanently extend the moratorium on taxing Internet access, and to prevent multiple and discriminatory taxation of Internet sales. With 176 House and 36 Senate co-sponsors, Congress could move forward with broadly supported legislation.
The moratorium has been in place, with some exceptions, since 1998, keeping Internet access more affordable but also freeing Internet commerce from discriminatory taxes. If Congress refuses to act, Internet taxes will increase, reducing access to the Internet, disproportionately affecting those least able to bear the increased cost and marginally reducing the uptake and use of broadband. If the country does have a broadband policy, finding ways to have ever-increasing speeds of broadband to a greater number of people, then such taxation policies stand in exact opposition. Moreover, letting the moratorium expire will also hurt economic growth and any resulting job creation.
One would think that immediate passage of a permanent moratorium would be a foregone conclusion, particularly since the taxes discriminate against certain technologies and business plans, and ultimately fall heaviest on those least able to bear the burden.
Maybe the failure to act is because of legislative game playing, specifically laying the groundwork to marry a highly controversial, government-expanding sales tax idea to the legislation and then announce the package as a “must pass.” Certainly a key player in the push to pass national Internet sales tax legislation has signaled that possibility.
Speaking of the deceptively titled Marketplace Fairness Act, Congressman Jason Chaffetz pointed out this week, “We’re running out of legislative days, but they get turned on again in November.” The point? Once Congress begins a lame duck session, he and others, will have the opportunity to act. Almost as if saying “After the election, I will have more flexibility.”
Internet access taxes and anti-discrimination legislation must not be burdened with other ideas, such as an Internet sales tax—an altogether different debate that is truly about whether Congress will vote to radically grow the reach and power of government. Rather, Congress should move to protect the Internet immediately, not putting at risk the growth of broadband and the economy.
Bartlett D. Cleland is a Resident Scholar of Tax and Innovation Policy for the Institute for Policy Innovation. Read more at www.ipi.org.