The Internet Tax Freedom Act
Local entities will be interested in tracking the federal moratorium on the ability of localities to tax internet access, which is set to expire November 1, 2007. The Internet Tax Freedom Act was signed into law October 21, 1998. The Act bans the taxing of internet access and “internet-only” taxes such as bit taxes, bandwidth taxes and email taxes. The measure further prohibits governments from taxing items sold online.
Since its original enactment, it has been twice extended by Congress. The early interest in this issue in the 2007 session bodes well for an extension. Moreover, at least one piece of proposed legislation would place a permanent ban on state taxes on internet access. This legislation is sponsored by Senators Wyden (Oregon), McCain (Arizona) and Sununu (New Hampshire). Wyden co-authored the original legislation passed in 1998 and also co-authored its most recent extension. Proponents of the legislation seek a means of ensuring more affordable broadband access, while opponents see a potentially vital local tax base being eroded by federal measures. President Bush supports the measure, which has a bipartisan base.
Thinking on internet service…Senator Stevens (Alaska) has proposed a measure, the Universal Service for Americans Act, which would require all communications services to pay into a fund which would subsidize service in rural areas, schools and libraries. The passage of this measure could result in user fees for broadband subscribers. The user fee measure could result in significant advantages in rural areas of Mississippi, the South, mid-West and Alaska.
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