Menu
House committee approves permanent Internet tax moratorium

House committee approves permanent Internet tax moratorium

The legislation would make permanent a temporary tax ban that's been in place since 1998

A U.S. House of Representatives committee has approved a bill that would permanently extend a moratorium on broadband access and Internet-specific taxes that Congress has temporarily extended three times over the past 16 years.

The House Judiciary Committee's 30-4 vote Wednesday sends the bill to the full House for a vote. The bill would also have to pass the Senate before becoming law.

The bill, called the Permanent Internet Tax Freedom Act [PITFA], would also remove past exemptions for seven states, including Texas and Ohio, that had Internet taxes in place before the moratorium first passed in 1998.

A permanent tax moratorium on Internet-only taxes will allow the Internet to continue to drive the U.S. economy and serve "as the greatest gateway to knowledge and engine of self improvement that has ever existed," said Representative Bob Goodlatte, a Virginia Republican and committee chairman.

The current Internet tax moratorium expires Nov. 1. "If the moratorium is not renewed, the potential tax burden on consumers will be substantial," with access tax rates that would likely exceed 10 percent, Goodlatte said.

Several committee Democrats backed an amendment that would again temporarily extend the tax moratorium, for four years, and would continue to allow the grandfathered states to collect taxes on Internet service. The committee rejected the amendment from Representative John Conyers Jr., a Michigan Democrat.

The initial reason for the tax moratorium, to allow a fledgling e-commerce industry to grow, no longer applies, Conyers said. The original Internet tax bill "was intended to be a temporary moratorium to nurture the Internet in its infancy," he said. "Today's Internet is very different from the Internet of 1998. The Internet is no longer a nascent idea in need of a federal tax protection to grow."

A permanent tax moratorium would also infringe on states' rights to decide what taxes to collect, some Democrats argued. And removing the grandfather clause from the seven states allowed to collect Internet taxes would take millions of dollars away from their budgets, they said.

States should be allowed to weigh the benefits and liabilities of Internet access taxes, said Representative Jerrold Nadler, a New York Democrat. "Why should we in Washington come in and tell them, 'you cannot make that decision?'"

Conyers urged the committee to move forward on a Senate bill, passed in May 2013, allowing states to collect sales taxes on Internet sales. The tax moratorium bill would not prohibit Congress from passing the controversial sales tax legislation.

The grandfathered states have had time to adjust their budgets in anticipation of a permanent moratorium, Goodlatte said. "It has been 16 years, time enough to change their tax codes," he said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags U.S. House of Representatives Judiciary CommitteelegislationgovernmentinternetJerrold NadlerJohn Conyers Jr.Bob Goodlatte

Featured

Slideshows

Reseller News launches inaugural Hall of Fame lunch

Reseller News launches inaugural Hall of Fame lunch

Reseller News welcomed 2015 and 2016 inductees - Darryl Swann, Dave Rosenberg, Gary Bigwood, Keith Watson, Mike Hill and Scott Green - to the inaugural Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed how the channel can collectively work together to benefit New Zealand, the Kiwi skills shortage and the future of the industry. Photos by Maria Stefina.

Reseller News launches inaugural Hall of Fame lunch
Educating from the epicentre - Why distributors are the pulse checkers of the channel

Educating from the epicentre - Why distributors are the pulse checkers of the channel

​As the channel changes and industry voices deepen, the need for clarity and insight heightens. Market misconceptions talk of an “under pressure” distribution space, with competitors in that fateful “race for relevance” across New Zealand. Amidst the cliched assumptions however, distribution is once again showing its strength, as a force to be listened to, rather than questioned. Traditionally, the role was born out of a need for vendors and resellers to find one another, acting as a bridge between the testing lab and the marketplace. Yet despite new technologies and business approaches shaking the channel to its very core, distributors remain tied to the epicentre - providing the voice of reason amidst a seismic industry shift. In looking across both sides of the vendor and partner fences, the middle concept of the three-tier chain remains centrally placed to understand the metrics of two differing worlds, as the continual pulse checkers of the local channel. This exclusive Reseller News Roundtable, in association with Dicker Data and rhipe, examined the pivotal role of distribution in understanding the health of the channel, educating from the epicentre as the market transforms at a rapid rate.

Educating from the epicentre - Why distributors are the pulse checkers of the channel
Kiwi channel reunites as After Hours kicks off 2017

Kiwi channel reunites as After Hours kicks off 2017

After Hours made a welcome return to the channel social calendar last night, with a bumper crowd of distributors, vendors and resellers descending on The Jefferson in Auckland to kickstart 2017. Photos by Maria Stefina.

Kiwi channel reunites as After Hours kicks off 2017
Show Comments