As the Wall Street Journal highlighted on today’s editorial page, the Internet Access Tax Moratorium is set to expire on November 1st and the Taxman is ready to "cometh."
The Internet Tax Freedom Act, enacted in 1998 and since extended twice, prevents multiple and discriminatory taxes on the Internet. In other words, different states can’t tax the same e-commerce transaction, and states and cities can’t create Internet-only taxes that don’t exist offline. So, except for a few grandfathered states, Internet access taxes are banned.
But a Congressional failure to extend the moratorium would quickly show up on monthly bills, and not quietly. Taxes on telephone service can run above 20%, more than triple the average general sales tax rate. Absent the moratorium, state revenue departments will begin to issue letters ruling that Internet access services are subject to these same sky-high telephone tax rates. The revenuers will do this because they can (until state courts judge their merit), not because they need the money. State and local governments have enjoyed 17 straight quarters of increasing revenues…
The indirect impact on constituents could be even more significant. A July 2007 Brookings Institution study found that for every 1% increase in broadband penetration, America adds about 300,000 jobs.
ACT is a leading member of the Don’t Tax Our Web Coalition which is pushing hard for a permanent moratorium. Without it, new taxes would certainly push broadband further out of the range of affordability for many underprivileged families around the country.
To speak out on this issue, sign up here and let your elected officials know what you think about new taxes on the Internet access.