Seven: Lucky Number for Taxpayers

Congress passes seven-year moratorium on Internet taxes, stops short of a permanent ban

Washington, DC – Two days before the November 1st expiration date of the Internet Tax Freedom Act, the House voted unanimously today to pass a seven-year extension of the ban on Internet taxation. While the proposal passed fails to make the current moratorium permanent, the seven year extension is a step forward from the House’s original four-year ban. The approved bill also makes important pro-taxpayer changes to the House’s narrow definition of Internet access.

Although the extension is the longest moratorium since the original ban was enacted in 1998, there was bipartisan support for a permanent ban on Internet taxation. Rep. Ann Eshoo’s bill for a permanent ban was cosponsored by 238 members. However, in the House Judiciary Committee, four of the cosponsors voted against an amendment to extend the moratorium permanently. The four members were representatives Rick Boucher (VA-9), Sheila Jackson Lee (TX-18), Robert Wexler (FL-19), and Steve Cohen (TN-9). Had the four members voted for the permanent amendment, it would have passed through the committee 19-17.

“Thanks to the leadership of senators Wyden, Sununu and McConnell, the Internet is safe for another seven years from the ravaging forces of state and local tax collectors,” said taxpayer advocate Grover Norquist, president of Americans for Tax Reform. “That being said, the blame for the temporary extension rests with representatives Boucher, Jackson Lee, Wexler and Cohen. These four stood in front of a permanent ban, which would go further to protect taxpayers and the innovation that grows the digital economy.”

The approved version changes to the definition as passed by the House take into account a Congressional Research Services report, requested by Sen. Ron Wyden (D-OR), that concluded the narrowed definition could open the door to taxes on some email and other products and services.

“When it comes to taxing the Internet, the definition of Internet access should be as broad as possible, the grandfather provisions for the handful of states allowed to tax the Internet should be eliminated and the loophole for states with gross receipts taxes should be closed,” continued Norquist. “The bill passed today represents a good step toward a pro-taxpayer permanent extension.”

Americans for Tax Reform (ATR) is a non-partisan coalition of taxpayers and taxpayer groups who oppose all federal, state and local tax increases. For more information please contact John Kartch at (202) 785-0266 or at jkartch@atr.org.