The Internet Tax Freedom Extension Act of 2007 was introduced in the Senate yesterday and would extend the current ban on Internet access taxes for another four years.
The bill was drafted by Senators Tom Carper, D-DE, and Lamar Alexander, R-TN. The Internet tax moratorium has been in place since 1998. The Carper-Alexander legislation would close tax loopholes and offer a clearer definition of "Internet access" while protecting services provided by state and local governments.
"Our bill would ensure that consumers continue to enjoy tax-free access to the Internet, including e-mail and instant messaging," Sen. Carper said
"In the meantime, we fix many problems with the current law so that as future services, such as cable television, migrate to the Internet, we don't completely erode the tax base of state and local governments."
The Carper-Alexander bill also closes a loophole that was in the original 1998 moratorium that would allow an Internet Service provider to bundle Internet access with other services and make them all tax-free.
The reasoning behind closing the loophole is that it would still keep Internet access tax-free and also not harm the tax base of state and local governments.
"If we could liken the Internet to a mall, a place where you can go in and purchase goods and services, and also liken it to a library, a place where you can go and pull a book, pull a resource, and obtain some information, why would we tax a person upon entering a mall or why would we tax a person upon entering the library?" asked Rep. Hank Johnson, a Democrat from Georgia.
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Make the Internet tax moratorium permanent
ITIF just released a report outlining the reasons in favor of making permanent the ban on Internet access taxes. The three main reasons are 1) to support a national broadband policy; 2) to protect the federal interest in ensuring all citizens have Internet access, and ensure no states are "free loaders"; and 3) to treat Internet access as an investment in production, much like machinery, which is tax-exempt in virtually all states.
The report also refutes the arguments of opponents of the moratorium which say states need these tax revenues. Here is the link to the full report --
http://www.itif.org/files/ITFA.pdf
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