Senate renews plan to ban internet taxes forever

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Do you ever look at your phone bill and wonder, “what the heck are all those fees?” While it’s a natural impulse to blame the mendacity of the phone company, most of those items are there because various governments put them there.

The good news is that federal law bans tax on internet service — meaning that most of us don’t see something like this on our broadband bill:

Screen Shot 2015-02-11 at 11.00.35 AM

Well, for now, at least. Due to a quirk in Congress, the current relief from internet taxes is based on a temporary measure that keeps expiring and getting renewed on a short-term basis.

But as The Hill reported Tuesday, a bipartisan group in the Senate, led by John Thune (R-SD) and Ron Wyden (D-Or), wants to change that by passing a law called the Internet Tax Freedom Forever Act.

Those who follow these things may say we’ve seen this movie before, and that Congress has tried and failed to make the internet tax permanent in the past – most recently last December.

This time is likely to be different, however, as the bill appears to be finally decoupled from a more contentious proposal known as the Marketplace Fairness Act, which would have required online retailers to collect state sales tax.

While both measures are broadly related to taxes and the internet, they are are in fact separate issues: one is about taxing ISP connections, and the other is about how state sales tax should apply to online retailers. But in the past, supporters of the latter have tried to tie the two issues together when it came to voting in Congress.

Now that the Internet Tax Freedom Forever Act appears to be up for debate on its own, however, its chances of success seem high given that it enjoys broad bipartisan support.

The measure could, however, get tangled up in the hot button issue of the FCC’s proposal net neutrality, which Republicans want to portray as tax grab. As I’ve explained in the past, such claims — including a “study” claiming a $17 billion tax hit — appear utterly specious but, well, that won’t stop certain grandstanders from touting them anyways.

Finally, it remains to be seen how a permanent ban on ISP taxes would affect seven states (Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin) that imposed internet taxes prior to October 1, 1998, and have been allowed to skirt the temporary ban because of a grandfather clause.

5 Comments

Rivered

They are talking about taxes on internet service, not sales tax on items purchased over the internet. This will only affect brick and mortars (and everybody else who pays for internet service) by not adding taxes to their internet service like there are on their phone lines if the title II classification happens. The internet is classified as an information service, and therefore has never been subject to being taxed like utilities have. I hope this passes, and the title II reclassification doesn’t. Who wants the government regulating internet prices? I sure don’t. They get enough of my money as it is. There are other ways to address net neutrality that do not involve the government adding taxes and regulating it.

Clint

Yeah this tax has nothing to do with brick and mortar stores. Maybe the previous version with extra things tacked on but this policy itself had zero effect on stores.

Deke

Hmmm. Republican’s dont like taxes, yet the majority of those states that have internet tax are, in fact, ran by republicans.

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