Photo Gage Skidmore/Flickr (CC BY-SA 2.0)

Congress wants to make the ban on Internet service taxes permanent

With no controversial strings attached, the measure has wide bipartisan support.

Mar 1, 2020, 10:20 am*



Tim Sampson

If you’re a cable or telephone subscriber, you’re no doubt familiar with the extraneous fees that get tacked on to your bill every month, fees that in some cases add up to hundreds of dollars per year.

Up until now, Internet users in most states have been spared similar fees, thanks to a federal ban on Internet service taxes. However, it’s only a short-term ban, and it could disappear at a moment’s notice without congressional reauthorization. That’s why a group of bipartisan lawmakers wants to make the ban permanent.

This week, Senators John Thune (R-S.D.) and Ron Wyden (D-Ore.), respectively the chairman and ranking member of the Senate Finance Committee, reintroduced legislation that would permanently prevent federal, state, or local governments from levying taxes on Internet service providers (ISPs).

The Internet Tax Freedom Forever Act already enjoys wide bipartisan support with 38 co-sponsors.

“Our bill, which would permanently ban Internet taxation, would encourage more American innovators and entrepreneurs to use broadband to develop the next big thing,” Thune said in a written statement, “while keeping the Internet open and accessible to consumers across the country.”

Thune, Wyden, and their co-sponsors want to etch in legislative stone a law that has been penciled in repeatedly since 1998. A ban on ISP taxes has existed since then, but that ban was written to be temporary, and Congress has had to reauthorize it four times in the past 17 years. The most recent renewal came last year.

After so many reauthorizations, the ban’s popularity seems obvious, and permanent codification would seem to be a no-brainer for lawmakers. But when a bill to make the ban permanent was introduced two years ago, lawmakers voted it down. That’s because it was part of a more controversial measure to exempt e-commerce services like Amazon from paying state and local sales taxes. For e-retailers, paying sales tax is optional in most cases, and many brick-and-mortar stores have been lobbying for a law that would level the playing field.

The Internet Tax Freedom Forever Act was introduced without any controversial provisions, although it does contain language that would also “bar multiple or discriminatory taxes on e-commerce.”

“Without ITFA, access to information would no longer be tax-free,” Wyden said. “Access to online communication would no longer be tax-free. Access to the global marketplace so crucial to America’s economic future would no longer be tax-free. The cost to consumers could easily be hundreds of dollars a year per household. Now is the time to make this law permanent.”

But even if the bill is successful, there is still a question of what would happen in seven states (Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas and Wisconsin) where taxes on Internet service existed prior to 1998 and were grandfathered in as part of the temporary ban’s language. Even with a permanent, federal ban, the combined 50 million residents of those states might still be stuck paying state-level Internet service taxes.

H/T Gigaom | Photo via Gage Skidmore/Flickr (CC BY-SA 2.0)

Share this article
*First Published: Feb 12, 2015, 7:07 pm