Menu
US House votes to ban Internet access taxes permanently

US House votes to ban Internet access taxes permanently

The House vote would extend a moratorium that's been in place since 1998

The U.S. House of Representatives has passed a bill to permanently extend a 17-year moratorium on taxing Internet access and other online services.

By voice vote on Tuesday, the House agreed to pass the Permanent Internet Tax Freedom Act, which would prohibit states from taxing Internet access and from levying any new taxes that target Internet services but have no offline equivalent. The bill would prohibit taxes on bandwidth or email, for example.

Congress has passed temporary moratoriums since 1998, and the current moratorium is set to expire Oct. 1.

The House action sends the bill to the Senate. Some senators have resisted calls for a permanent tax moratorium in recent years.

Under the Permanent Internet Tax Freedom Act, Congress could still let states force Internet retailers to collect sales tax. Retail groups have been pushing Congress to allow online sales taxes for years, but lawmakers have resisted because of potential complications with collecting the tax.

Supporters of the bill argued new taxes could slow the adoption and growth of Internet commerce. If the tax moratorium is allowed to expire, Internet users would be hit with a "substantial tax burden," said Representative Bob Goodlatte, a Virginia Republican and bill sponsor.

The average tax rate across the U.S. on other communications services, such as mobile voice, is more than 13 percent, and Internet users could expect the same taxes if the moratorium expires, he said.

New taxes would hit poor U.S consumers especially hard, said Representative Anna Eshoo, a California Democrat. "We want to encourage expanded broadband adoption," she said. "If you tax it, you're going to shrink it."

Some Democrats objected to a permanent tax moratorium. Past moratoriums have allowed a handful of states that had Internet access or ISP taxes before 1998 to keep them, but the new legislation ends that grandfather clause. The 10 states allowed to tax Internet access would lose about US$500 million a year in revenue, said Representative Sheila Jackson Lee, a Texas Democrat.

States with Internet access taxes include Texas, Ohio, Wisconsin and Tennessee. The bill will "severely impact" the budgets of the grandfathered states, with Texas losing the biggest amount, Jackson Lee said.

The Retail Industry Leaders Association, a trade group, called on the Senate to pass Internet sales tax legislation in addition to the moratorium.

"Sales tax parity should be addressed as part of legislation extending the moratorium on taxing Internet access," Jennifer Safavian, the group's executive vice president for government affairs, said by email. "Retailers support keeping Internet access tax free while closing the online loophole that essentially subsidizes online-only retailers against their brick and mortar competitors."

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 newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags governmentinternetlegislatione-commerceAnna EshooU.S. House of RepresentativesBob GoodlatteRetail Industry Leaders AssociationSheila Jackson LeeJennifer Safavian

Featured

Slideshows

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Reseller News has honoured the leading female front runners of the New Zealand ICT industry at the 2019 Women in ICT Awards (WIICTA) in Auckland. The awards recognised standout individuals across six categories, spanning Entrepreneur, Rising Star, Shining Star, Community, Technical and Achievement. Photos by Gino Demeer.

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA
Reseller News kicks off awards season in 2019 with Judges' Lunch

Reseller News kicks off awards season in 2019 with Judges' Lunch

The 2019 Reseller News Innovation Awards has kicked off with the Judges Lunch in Auckland with 70 judges in the voting panel. The awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors. Photos by Christine Wong.

Reseller News kicks off awards season in 2019 with Judges' Lunch
Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomed 2018 inductees - Chris Simpson, Kendra Ross and Phill Patton - to the third running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing landscape of the technology industry in New Zealand, while outlining ways to attract a new breed of players to the ecosystem. Photos by Gino Demeer.

Reseller News welcomes industry figures for 2019 Hall of Fame lunch
Show Comments