Keep the Internet tax-free: Conservatives urge the Senate to permanently extend the Internet tax moratorium

A coalition of more than 40 conservative and libertarian organizations and entities have written a letter to members of the United States Senate urging them to pass S. 1431, the Internet Tax Freedom Forever Act, a measure sponsored by Sens. Ron Wyden (D-OR) and John Thune (R-SD) that would permanent extend the tax moratorium on Internet access.

In July, the House of Representatives passed H.R. 3086, the Permanent Internet Tax Freedom Act, to ensure that access to the Internet will never be subject to local, state, and/or federal taxes. Unfortunately, the measure has been stalled in the Senate, where some members, including Majority Leader Harry Reid (D-NV), are trying to attach the so-called “Marketplace Fairness Act” to it.

The Marketplace Fairness Act is, basically, the Internet sales tax. The legislation, backed by brick-and-mortar retailers, would allow states to tax Internet purchases from businesses without a physical presence within their borders. Needless to say, attaching this measure to another one that promotes tax freedom makes no sense. But, well, we’re talking about Washington.

The coalition* — which includes Grover Norquist of Americans for Tax Reform, Phil Kerpen of American Commitment, and Norman Singleton of Campaign for Liberty — urges senators to pass a clean version of the Internet tax moratorium.

“Americans would be overjoyed to see Congress agree, and pass, legislation that protects consumers from increased costs when accessing and using the Internet, and protects them from discriminatory or duplicative taxation of Internet commerce,” the letter states. “Taxes on communications services are already punitive and discriminatory. The average sales tax rate on voice services is 17 percent, and 12 percent on video services, while the average general sales tax rate is 7 percent. A clean ITFFA would at the very least prevent this targeted tax on Internet access.”

“Excessive taxes will hinder continued growth in the digital space. The FCC’s National Broadband Plan states that the largest barrier to consumer adoption and expanded use of Internet based services is cost. Allowing the Internet access tax moratorium to lapse would certainly lead to higher tax rates on consumers and thus reduce the rate of adoption and innovation. The Internet is our greatest gateway to innovation and education, higher taxes on Internet access undermines American economic competiveness and growth,” the letter adds.

The Senate will have around two weeks to act on the Internet tax moratorium before it adjourns for the mid-term election. There has been discussion of a temporary extension to carry the moratorium past the November 1 expiration date. It’s likely that the issue would resurface in a lame-duck session of Congress.

*This author signed the coalition letter on behalf of United Liberty.

Coalition Letter in Favor of a Permanent Internet Tax Moratorium

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