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News Link • TAXES: Internet

Permanent Ban On Internet Access Taxation Approved By Congress

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On Tuesday, the House passed the Permanent Internet Tax Freedom Act (PITFA), bipartisan legislation that would permanently prevent states from taxing internet access. The legislation was passed by a voice vote.

The first Internet Tax Freedom Act was a moratorium as part of Public Law 105-277, first signed by President Bill Clinton in 1998. Extensions to the moratorium have been passed five times, but the law was set to expire on October 1 if no further actions were to be taken.

Rep. Bob Goodlatte (R-Va.), a sponsor of PITFA, said in a statement that making a ban on internet access taxation permanent promotes innovation. "If the moratorium is not renewed or made permanent, the potential tax burden on Americans would be substantial. It is estimated that Internet access tax rates could be more than twice the average rate of all other goods and services – and the last thing that Americans need is another tax bill on their doorsteps," he said.

Some regions of states had already enacted taxes on internet access before the first moratorium was signed, including Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas and Wisconsin. Those regions have been allowed to continue taxing internet access under a grandfather clause, but they would no longer be allowed to do so if PITFA becomes law. The Congressional Budget Office estimated that the loss of internet access tax revenue could total "several hundred million dollars annually."

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