At last, some good news from Washington: a bipartisan, consumer-friendly bill overwhelmingly passed the U.S. House of Representatives last month. But now it deserves the urgent attention of Illinois’ Sen. Dick Durbin and his colleagues to make sure the legislation gets to the president’s desk.
As its name implies, the Permanent Internet Tax Freedom Act (PITFA) would permanently ban taxes on Internet access. That means each month, Internet service remains free of punitive taxes from state and local governments.
The first Internet Tax Moratorium passed in 1998 to remove impediments to consumer adoption of Internet services. While the resulting spread of this amazing information infrastructure has been impressive, there are still pockets of the country, including parts of Illinois, where take-up rates would benefit from minimal taxes on the Internet. As a gateway to education and entrepreneurial opportunities it is critical to keep access open for all Americans regardless of race, income, or neighborhood.
In pursuing passage, the Senate still must be careful not to let this bipartisan bill become entangled with other issues like the Marketplace Fairness Act (MFA), a measure supported by Sen. Durbin. That bill would allow states to reach across their borders and enforce taxes on Internet purchases in a complex and controversial way — which really has nothing to do with online service
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Keeping Internet service affordable is a unique issue that should stand on its own, and support for the Internet Tax Freedom Forever Act is strong. The “clean,” bipartisan version of the legislation maintains 50 sponsors and cosponsors.
Meanwhile, the Marketplace Fairness Act has already proven to be unwelcome in the House, failing to get close to a vote last session.
The Wall Street Journal editorial board astutely opined: “The (MFA) sales-tax debate will continue. Meantime, the Senate should help consumers now by passing (the) permanent ban on email taxes.”
More than 10,000 different state and local jurisdictions across the nation tax communication services. Average tax rates imposed on these services are already extremely high, with 17 percent on telephone and voice, and 12 percent on cable and video, compared to an average general sales tax rate of 7 percent.
A permanent extension of the Internet Tax Moratorium would prevent the proverbial floodgates from opening and dumping similar onerous rates on America’s Internet subscribers.
Sen. Durbin has an opportunity to do the right thing for consumers across the country. A clean bill that makes permanent the Internet Tax Moratorium is a priority that the Senate should address quickly, since the current ban expires later this year. Doing so could even serve as a helpful bipartisan step toward accomplishing additional legislative priorities in the Senate. But for Illinoisans, and all Americans, it’s something different: a vital step toward protecting American families and businesses from predatory taxes.
Pete Sepp is president of the National Taxpayers Union