Discriminatory Taxes on the Internet

The free flow of money and information is essential for personal freedom and a healthy economy. The Internet's ability to speed the flow of both is remarkable.

Everyone has a stake in ensuring that the Internet develops without excessive regulation and taxation. The government continues to burden traditional telecommunications services with taxes and regulations, and it's poised to restrict the speed and accessibility of the Internet through regulation.

While taxes may be one of life’s certainties, the Internet has, so far, miraculously managed to escape the clutches of revenue-hungry government tax collectors.

Back in 1998, Congress first passed the Internet Tax Freedom Act, imposing a three-year moratorium on state and local taxes on Internet access. The moratorium came just as some local governments began to extend their very high telecommunications taxes to accessing the Net. Our goal was simple: encourage the spread of this important new technology by preventing government from strangling it in its crib with high taxes.

More temporary extensions were passed in 2001 and in 2007, but Congress still has not passed a certain and pemanent ban on internet taxes.

For consumers, the situation is no laughing matter. State and local access fees could add 20-25% to the average Internet consumer’s bill – a tax hike of about $150 per year. That may not sound like much in Washington, but it could strand millions of low-income Americans on the wrong side of the digital divide. And higher Internet charges could hinder small business from gaining access to the technology they need to compete with larger companies. Schools, libraries and other educational and research institutions with limited budgets would also take a hit.

The current moratorium expires in 2014. Before then, Congress needs to lock the tax man away permanently and throw away the key by passing a permanent ban on internet taxes.