Congress decides next week whether or not to make permanent the Internet tax moratorium.
WASHINGTON – Congress will vote next week on the Internet Tax Non-Discrimination Act, legislation that calls to permanently extend moratorium on Internet taxes, which will expire on Nov. 1. The legislation is expected to pass both houses overwhelmingly.
In opposition are many state governments, which see the bill as a hedge against a new source of revenue. But taxpayer and consumer groups support the legislation, claiming that Internet taxes will be passed onto consumers, which will slow growth in the industry and technology sector.
"Internet taxes will hit schools, libraries, hospitals and families – those who use the Internet for research, education, and most critically, communication," said taxpayer advocate Grover Norquist, president of Americans for Tax Reform (ATR). "Permanent extension of the moratorium will signal another death blow to the bureaucrats and public employees unions who see the Internet as another cash cow to milk," he continued.
The states are claiming that they need the additional revenue to help cover budget shortfalls. But enacting an Internet tax unilaterally would send commerce to other states, leading some governors and legislature associations to propose a virtual cartel on Internet taxes. As Aaron Lukas of the Cato Institute in Washington D.C. explains, internet taxation is not primarily about raising revenue, nor is it about economic efficiency or equity, which proponents of the tax say will be achieved. "The reality is much simpler: state and local officials want to control an ever-expanding portion of our incomes," says Lukas.
Meanwhile, Neal Olsten, director of telecommunications and interstate commerce for the National Conference of State Legislatures admits that the moratorium will pass. "It is not a battle we are going to win."
"Permanent extension of the ITM is a huge victory for taxpayers, and massive defeat for big spenders at the local and state levels," continued Norquist.