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Louisiana Senate Commerce Commitee Considers Internet Tax


Posted by Patrick Gleason on Wednesday, June 17th, 2009, 6:12 AM PERMALINK


The following is cross-posted on www.stopetaxes.com

The Louisiana Senate Commerce Committee will hold a hearing this morning on House Bill 569, legislation that would impose a new tax on internet access.

The internet has been an invaluable driver of economic growth and job creation, making a tax on internet access particularly onerous. Furthermore, it is preempted by federal law.

In testimony to the commerce committee and in a letter to the entire Senate, ATR noted that perhaps most troubling is the fact that HB 569 represents an attempt to circumvent federal law. The Internet Tax Freedom Act, passed by Congress in 1998 and reauthorized in 2007, prevents states from enacting taxes on internet access.  Calling this tax hike a “fee” in an attempt to bypass federal law is misleading and would invite significant and costly legal challenge for Louisiana if adopted. The contracting economy has presented many budgetary challenges for the Pelican State. In such an environment, it would be foolish to pass legislation that would inevitably require the state to expend taxpayer funds to not only defend the case, but pay the plaintiffs attorneys’ fees if the law is struck down.

ATR staff will be on hand at the hearing today. Stay tuned to this website for further updates. For more frequent updates from the hearing, follow ATR's state affairs manager, Patrick Gleason, on twitter: @patrickmgleason

Below is the full letter that ATR sent to the Louisiana Senate.

 
 
Dear Chairman Duplessis and Members of the Commerce Committee,
 
On behalf of Americans for Tax Reform (ATR), I am contacting you today to express strong opposition House Bill 569, legislation that would impose a new tax on internet access.
 
The monthly 15 cent tax that this bill, if passed, would levy on internet access is ostensibly for the purpose of investigating and prosecuting internet crimes. While this is a laudable goal, there are many ways to fund such an effort without resorting to a $2.4 million tax increase in the middle of a recession.
 
Perhaps even more troubling is the fact that HB 569 represents an attempt to circumvent federal law. The Internet Tax Freedom Act, passed by Congress in 1998 and reauthorized in 2007, prevents states from enacting taxes on internet access.  Calling this tax hike a “fee” in an attempt to bypass federal law is misleading and would invite significant and costly legal challenge for Louisiana if adopted. The contracting economy has presented many budgetary challenges for the Pelican State. In such an environment, it would be foolish to pass legislation that would likely require the state to expend taxpayer funds to not only defend the case, but pay the plaintiffs attorneys’ fees if the law is struck down.
 
While all tax increases should be avoided, especially in an economic downturn, a new tax on internet access would be particularly onerous. The internet has been an invaluable driver of economic growth and job creation. As such, any level of tax placed on access to the internet would have an economically deleterious effect.
 
Furthermore, this tax would set a horrible precedent. There is an endless limit to noble causes politicians may claim necessitate a new tax. Pelican State residents already work 187 days out of the year paying for the cost of government services and regulation. If something is a priority, make it one by funding it with current revenues. Claiming that a new tax is needed is an admission that the cause to be funded by that tax is the lowest priority on the totem poll.
 
The Internet has survived and thrived because the government has thus far been forced to keep its hands off of it. It is the last, best example of a truly free market left in this country and this bill before the committee today would be a step in the wrong direction for the Louisiana economy and online community.
 
As you continue to weigh options to address spending priorities, I urge you to stand up for Louisiana taxpayers and oppose all tax increases. If you have any questions, please contact ATR’s State Affairs Manager, Patrick Gleason at pgleason@atr.org.
 
Sincerely,
Grover G. Norquist
 
CC: Governor Bobby Jindal

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