As time ran out on Congress’s most recent approved extension of the Internet tax moratorium, Michael Powell, the president of the National Cable & Telecommunications Association, joined United States Telecom Association CEO President Walter McCormick, Jr. and Meredith Atwell Baker, the president of wireless association CTIA, in recommending swift approval of a trade bill with language that extends permanently the Internet Tax Freedom Act (ITFA).
Powell, McCormick and Baker made their plea in a letter that was delivered to Senate members two days before the mandated expiration of the ITFA on Wednesday. Signed into law in 1998, the ITFA prohibits imposition of state and local taxes on Internet access in all but seven grandfathered states where laws allowing such taxation had been previously enacted. Although the ITFA has since been extended several times (with the most recent extension expiring on Wednesday), Senate negotiators agreed to add language to a conference report on the trade bill (S. 644) that would permanently codify the ITFA and phase out Internet access taxes in grandfathered states by 2020. Meanwhile, Capitol Hill sources report that the omnibus budget bill, which remains under Congressional debate (and which must be adopted by next Tuesday to avoid a government shutdown), includes riders that would temporarily extend the ITFA through October 1, 2016 and would also grandfather broadcast joint sales agreements in effect when the FCC adopted rules in March 2014 that classified such agreements as attributable ownership interests.
While calling for a “yes vote on the conference report” and resistance against any effort “to strip the current language making ITFA permanent,” Powell, McCormick and Baker warned of the “imminent threat” of “onerous telecommunications taxes and fees” on broadband Internet access “due to the [FCC’s] recent reclassification of broadband services as a Title II telecommunications service.” Along that vein, the executives maintained that such taxes and fees are often imposed at “rates twice that of general sales taxes—11.5% on average but as high as 17% in some places.” As they urged lawmakers to “protect consumers from new regressive state and local taxation of Internet access,” Powell, McCormick and Baker proclaimed: “Congress should ensure that every American can afford to participate in the digital economy by making the expiring ban on Internet access taxation permanent.”