Movement of the Permanent Internet Tax Moratorium

Movement of the Permanent Internet Tax Moratorium
June 22, 2014

Bartlett Cleland

Bartlett Cleland is the Managing Director of Madery Bridge Associates, public strategy firm... (read full bio)

This morning the House Judiciary Committee will undertake the markup of the Permanent Internet Tax Freedom Act.  The Act would protect consumers from the increased costs in accessing and using the Internet by permanently extending the moratorium on Internet access taxes, and would prevent multiple and discriminatory taxation of Internet sales.

The legislation already boasts deep bipartisan support with 138 Republican and 76 Democrat co-sponsors. That’s 214 members of the House supporting it, and rumors of more to join soon would bring the total to more than 50 percent. The Senate version of the bill has 50 co-sponsors. So, there is already enough support for a permanent moratorium that doesn’t add extraneous elements that could cause the moratorium to fail.

The legislation also enjoys broad support of thought leaders and citizens, as was made clear in an April letter to Congress. But time to pass the measure is of the essence since the moratorium will expire on November 1 of this year. If allowed to expire, states would begin to collect taxes on Internet access, or apply other discriminatory taxes that may already be in place but which have been held at bay during the moratorium.

Scott Mackey, former chief economist for the National Conference of State Legislatures and currently a consultant to the wireless industry, has estimated that an average household’s taxes would increase by $50 to $75 a year if states decide to apply their sales or telecommunications taxes to Internet access. While that doesn’t seem like much, keep in mind that that’s about what a low-income family spends in a year on subsidized school lunches. Those who qualify for such programs are exactly those who will be most negatively affected by a lapsed moratorium.

Businesses also lose money when Congress doesn’t send a clear message. If Congress dallies—and history has proven that Congress rarely acts in time—telecommunications providers would need to prepare to collect the new taxes. That effort would be a waste of time and resources if Congress were to ride to the rescue at the last minute—a result of the cavalier attitude by government. Less economic growth and fewer jobs are the result. 

Hopefully, the next step on the right path will be taken today with the House Judiciary Committee deciding that the moratorium must continue and refraining from introducing other issues  which will end its progress  in the House.

[Originally published at The Institute for Policy Innovation]

Bartlett Cleland

Bartlett Cleland is the Managing Director of Madery Bridge Associates, public strategy firm... (read full bio)