On Tuesday, the House of Representatives passed H.R. 235, the Permanent Internet Tax Freedom Act (PITFA), by a voice vote. The purpose of this legislation, as one may infer from its name, is to permanently ban the imposition of an Internet access tax by any state, as well as imposing discriminatory taxes on e-commerce.
Additionally, while some states had Internet access taxes that were grand-fathered in by the 1998 Internet Tax Freedom Act, this bill will cause those exceptions to permanently expire. Removing these exceptions will save Americans hundreds of millions of dollars. Unfortunately, PITFA does not prevent states from collecting sales tax on online transactions.
The essential nature of this bill stems from the essential nature of the service it protects. The Internet has become the primary source of news for a huge number of young Americans, particularly young adults, and social media such as Twitter and Facebook have become important components of communication and even war or crisis reporting.
PITFA ensures that the Internet is easily accessible and online commerce will not be taxed in a discriminatory way, meaning online sales cannot be taxed at a higher rate than other sale. The tax rate on other communication services was just over 17% last year; PITFA ensures that such steep tax rates don’t limit Americans’ Internet access and online activity. It preserves the Internet as an inexpensive tool for news dissemination, communication, entertainment, and business, and as a vehicle for innovation.
After the bill was passed, its author, House Judiciary Committee Chairman Bob Goodlatte (R-Va.), and co-sponsors praised its bipartisan passage, saying “Internet access drives innovation and the success of our economy. It is a gateway to knowledge, opportunity, and the rest of the world. The American people deserve affordable access to the Internet and the Permanent Internet Tax Freedom Act will help prevent unreasonable cost increases that hurt consumers and slow job creation”.
PITFA’s passage is a major victory against government overregulation and for the American consumer’s wallet. While it still needs to pass the Senate, this bill removes any doubt of continuing unencumbered access to today’s most important resource and will spur entrepreneurship and innovation for decades to come. We applaud both Republican and Democrat members of the House for coming together to support this intelligent and important piece of legislation.