Congress Votes to Prohibit Internet Tax

Congress voted last Thursday to indefinitely ban state and local governments from taxing Internet access. The Internet Tax Freedom Act breezed through the House and Senate as part of a customs bill (H. R. 644) that Obama has promised to sign. The bill passed through the Senate with a 75-20 vote as lawmakers jumped at the election-year opportunity to exemplify their opposition to imposing restrictions on Internet service.

“This is a great day for American consumers,” says Ajit Pai of the Federal Communications Commission (FCC). “This confirms a national consensus that state and local taxes on Internet access should be taken off the table once and for all.”

“The Internet is a resource used daily by Americans of all ages,” explains Senator Mitch McConnell (R-KY), who arranged an agreement with one of Congress’ Democratic leaders that helped pave the way for the bill’s passage. “It’s important that they be able to do all of this without the worry of their Internet access being taxed.”

The idea to ban local Internet access has widespread support. However, some lawmakers remain displeased regarding the bill’s trade provisions and because the document omits a controversial proposal that would have allowed states to force online retailers to gather sales tax for transactions. The bill is full of “missed opportunities and half-measures,” complains Senator Harry Reid (D-NV).

The popular belief that the Internet should be free has spurred Congress to pass temporary bans on Internet taxes since the 1990’s. But until now, seven states have been getting away with it. New Mexico, Hawaii, Ohio, North Dakota, Texas, Wisconsin, and South Dakota have been reaping an annual sum that when combined exceeds $500 million. When Obama signs H. R. 644, these states will have until 2020 to phase out their Internet taxation systems.

The wide-ranging bill, which will also revamp trade laws, has pitted the US Chamber of Commerce and several business groups against the ALF-CIO and multiple labor organizations.

Supporters believe the bill would increase the US government’s ability to head off China and other nations from manipulating the value of their currencies in order to make their exports more affordable, boost US trading by improving protections for intellectual property including trademarks and copyrights, and help authorities crack down on imported goods that have been produced through the use of child labor.  

Democratic critics argue that the document’s trade protections are insufficient and complain that those who penned the compromise weakened the bill to the point of uselessness. Many Democrats were not happy with provisions barring trade agreements that might inhibit efforts to curb greenhouse gas emissions and force the US to restructure immigration laws.