ISPs Push Tax Reform Renewal

Internet access providers are calling on the lame duck Congress to hurry up and extend the Internet Tax Freedom Act before the current law expires Dec. 11. National Cable & Telecommunications Association President Michael Powell said not to do so would be a "tragic mistake." They also want to make it permanent.

According to the Internet Tax Freedom Act Coalition, that came in a letter signed by the National Cable & Telecommunications Association, the American Cable Association, COMPTEL, CTIA, and USTelecom, and others representing ISPs serving 275 million consumers.

A temporary ban on Internet access taxes has been regularly renewed since it was first adopted in 1998, but the bill would make that ban permanent.

The House passed a bill in July. The expiration date on the ISP tax moratorium had been Nov. 1, but that was pushed to Dec. 11 to give the Senate more time to follow suit.

"we respectfully request you to take action immediately to protect all Americans from new regressive state and local taxation of Internet access and multiple and discriminatory taxation of Internet commerce," the ISPs said in a letter to house and Senate leadership. "If Congress fails to act soon, millions of broadband, cable and wireless consumers will be at risk for new taxes in thousands of state and local jurisdictions. Now is the time to provide all Americans with certainty that their Internet access will never be subject to tax."

“Keeping Internet access free from state and local taxes has been a fundamental principle since the Internet was introduced to American consumers,” said Powell in a statement accompanying the announcement of the letter. “Reversing this course which has sparked such tremendous economic growth and numerous other benefits would be a tragic mistake. We urge the Congress to quickly take up and pass this important, bipartisan legislation so that American consumers and businesses will continue to be protected from any additional taxes and fees that could raise the price of Internet access and slow the rapid adoption of broadband services.”

The bill has bipartisan, though not universal, support, including from the cochairs of the Congressional Internet Caucus-- ranking House Communications Subcommittee member Rep. Anna Eshoo (D-Calif.), House Judiciary Committee chairman Bob Goodlatte (R-Va.), Senate Judiciary chair Sen. Patrick Leahy (D-Vt.) and Commerce Committee ranking member Sen. John Thune (R-S.D.).

Passage of the House version came on a voice vote without the representatives having to record their votes. But that easy passage belied some of the strong opposition to the bill in floor speeches before the vote, particularly from representatives of grandfathered states. Arguments for the permanent moratorium included that it was saving consumers from discriminatory taxes that could disproportionately affect the poor and discourage broadband use. Arguments against included that it was preempting states' rights to determine the best way to raise money and to "fill the potholes and clean the streets."

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.