Permanent Internet tax ban moves forward in the House

By Josh Peterson | Watchdog.org

WASHINGTON — The tension between federal and state powers over a permanent ban on Internet access taxes took the spotlight on Wednesday during House Judiciary Committee debate.

Without an extension passed by Congress, a moratorium banning state and local governments from taxing internet access, first enacted in 1998, is set to end on Nov. 1.

The bill, the Permanent Internet Tax Freedom Act, not only would make the ban permanent, it also would ban “multiple and discriminatory taxes on electronic commerce.”

Committee members voted 30-4 to move the bill forward for consideration by the House of Representatives, but not without debating the federal government’s power to restrict state and local government’s ability to raise taxes.

Rather than instituting a permanent ban, U.S. Rep. John Conyers, D-Mich., said he had hoped to continue with a temporary moratorium that could be revisited by Congress.

Conyers was opposed by the bill’s supporters, however, who agreed that Congress could revisit the law in the future if it needed to be changed.

The bill’s sponsors include House Judiciary Committee Chairman Bob Goodlatte, R-Va., and U.S. Reps. Spencer Bachus, R-Ala., Steve Chabot, R-Ohio, and Steve Cohen, D-Tenn. — all of whom received a combined $432, 041 from political action committees and individual donors representing the computer and electronics sectors for the 2014 election cycle, according to OpenSecrets.org.

The computers and Internet industry also is the second highest contributor to the re-election campaign of U.S. Rep. Anna Eshoo, D-Calif., also a bill cosponsor.

As of May 19, computer industry-affiliated donors already had backed Eshoo’s 2014 re-election campaign with $97,240 of donations from individuals and political action committees.

In a blog post published on Tuesday, Amy McLean, director of advocacy communications of MyWireless.org, a consumer advocacy organization affiliated with the wireless industry, called the hearing “good news.”

“As we blogged about last week, extending the moratorium on taxing internet access is crucial to ensuring that Americans have affordable and wide-spread access to the Internet,” said McLean.

MyWireless.org organized a petition that received thousands of signatures from citizens, as well as participated in a coalition of organizations that signed on to a letter to lawmakers, both in support of the ban.

During the past several years, the federal government and state governments have been locked in a struggle over imposing and enforcing online sales taxes laws.

States and local governments argue that federal interstate commerce laws prohibit states from taxing online sales. Critics retort that state governments are looking for a politically savvy way to tax people who do not reside within their borders.

Tensions between federal and state oversight over the Internet were also highlighted recently when, in early June, a group of Republican senators challenged Federal Communications Commission Chairman Tom Wheeler’s plan to ignore state laws banning Internet services funded by local taxpayers.

Nearly a week later, in a blog post promoting the local Internet services of Chattanooga, Tenn., Wheeler reminded the senators that local elected officials were just as accountable to taxpayers as state officials.

“I understand that, like any venture, community broadband there hasn’t always been a success,” said Wheeler, stating that “a review of the record shows far more successes than failures.”

“If the people, acting through their elected local governments, want to pursue competitive community broadband, they shouldn’t be stopped by state laws promoted by cable and telephone companies that don’t want that competition,” said Wheeler.

Contact Josh Peterson at jpeterson@watchdog.org. Follow Josh on Twitter at @jdpeterson