Internet Tax Debate: Freedom vs. Taxation

Senators Allen and Alexander debate future of Internet access taxes.

WASHINGTON - Today Senators George Allen (R-VA) and Lamar Alexander (R-TN) and held a debate, sponsored by the Heritage Foundation, to discuss the future of the Internet access tax moratorium. Senators Allen and Alexander deliberated the differences between their two competing bills and outlined their opinions on whether or not states should be allowed to tax Internet access. Americans for Tax Reform (ATR), the nations leading taxpayer advocacy organization, shares Senator Allen's view that keeping the Internet tax free represents "freedom," and strongly supports S. 150, the Internet Non-Discrimination Act.

"Senator Allen has proven time and again that his main concern is to protect taxpayers instead of tax collectors and to encourage innovation and economic growth by freeing them of excessive taxation and regulation" said Grover Norquist, President of ATR. "Unfortunately, Senator Alexander wants to join his tax the Internet cronies, Sens. Carper and Feinstein as the Senators that allowed states to tax the Internet."

The Internet Non- Discrimination Act, introduced by Senator Allen permanently extends the Internet Tax Freedom Act passed by Congress in 1998. The legislation eliminates taxes on Internet access, double-taxation of a product or service bought over the Internet, and discriminatory taxes that treat Internet purchases differently than other types of sales. In addition, it ensures that all methods that deliver Internet access are covered by the moratorium to encourage technological innovation and protect consumers from taxes on new technology.

The legislation introduced by Senator Alexander turns 7,600 state and local jurisdictions loose to tax every email, blackberry message and spam filtering system. Moreover, the bill slaps at least $1.5 billion in new taxes on more than 10s of millions of DSL and wireless internet users.

This means that every student laptop user who gets on the internet at Starbucks or in a classroom and every business person who gets on the Internet at an airport or a hotel room would be facing new Internet access taxes. These regressive taxes can run upwards of 20-25% of a consumer's monthly access bill, or about $120 to $150 a year. Furthermore, the bill makes a mockery of tax and technological neutrality, and denies consumers a real choice in high speed internet access by discouraging consumers from choosing wireless and DSL

" By ensuring that the Internet remains tax-free, individuals and small businesses that could not afford access to the Internet have begun to share in the wealth of opportunities that the World Wide Web has offered ," said Norquist. "Senator Allen clearly showed in today's debate that he understands the wealth of opportunities and economic growth that a tax free Internet has provided American businesses and consumers."

If the Senate fails to follow the House of Representatives lead and does not pass a permanent technologically neutral ban on Internet access taxes and multiple and discriminatory taxes, it will mean a defacto tax increase on Americans at a time when they are least able to pay it. This tax will also hit schools, libraries, hospitals and families - those who use the Internet for research, education, and, most critically, communication. Therefore, S. 150, in its current form, must be brought to the Senate floor for a vote and passed.

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