Players throughout the cable, wireless and wireline telecommunications industries applauded the vote of House members on Tuesday to adopt legislation that extends permanently the current moratorium on Internet access taxes that was first enacted nearly two decades ago. Approved by a voice vote, the bill, known as the Internet Tax Freedom Act (ITFA), codifies permanently the current moratorium against state and local government taxation of Internet access that has been extended five times since 1998. The current moratorium will expire on October 1 unless the IFTA is signed into law before that date.
Arguing that the Internet is well past its infancy and that the moratorium deprives them of a potentially significant source of revenue, state and local governments remain strongly opposed to IFTA. In remarks on the House floor, however, House Judiciary Committee Chairman Bob Goodlatte (R-VA) warned that, unless IFTA is adopted, “the potential tax burden on consumers will be substantial” as “the average rate on communications services in 2007 was 13.5%, more than the average rate on all other goods and services.” Backers in the Senate, meanwhile, pushed to add the IFTA to a separate Senate bill, known as the Marketplace Fairness Act (MFA), which upholds the right of state and local jurisdictions to collect sales taxes on online, catalog and other transactions conducted by out-of-state retailers. While Senator Mike Enzi noted that the MFA “passed the Senate in the last Congress by a bipartisan vote of 69 senators,” Senator Dick Durbin (D-IL) told reporters, “I hope we can move both measures as soon as possible.”
Similarly, National Cable & Telecommunications Association President Michael Powell urged the Senate “to quickly pass its companion legislation so this tax moratorium can finally become permanent.” USTelecom President Walter McCormick predicted that the IFTA “will protect consumers . . . while encouraging innovation and investment.”