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Action Looms on ISP Tax Ban

2/08/2016 8:00 AM Eastern

WASHINGTON — The Senate is scheduled to vote Feb. 10 on the Trade Facilitation and Trade Enforcement Act of 2015, which contains a permanent version of the Internet Tax Freedom Act.

 

The ITFA is a temporary ban on taxing Internet access that has been in place since 1998, applying to all but a handful of states where access taxes were grandfathered in at the time.

 

A permanent ITFA would remove the need to renew the bill every few years and phase out those grandfathered state ISP taxes over the next five years. It has already passed the House.

 

The state taxes in question represent hundreds of millions of dollars in revenue to those states.

 

Consideration of the trade bill was deferred from late last year by Democrats who did not want the permanent ITFA to pass unless Congress also passed the Market place Fairness Act (MFA). Among the Democrats who got the bill held over was Sen. Dick Durbin (D-Ill.), whose state is one of those where the tax would be phased out.

 

The MFA would help offset some of that loss by permitting local sales taxes on e-commerce. But Republicans are not supportive of that bill.

 

While the vote is scheduled for Feb. 10, it is possible the ITFA amendment could be stripped out and dealt with separately, particularly since the nonpermanent ITFA was renewed through the end of October.

 

Backers of the legislation, hoping to keep the ITFA in the larger bill and achieve Senate passage, held a rally on Capitol Hill last week. Sen. Ron Wyden (D-Ore.), who co-wrote the 1998 ITFA bill, has been a strong proponent of making the moratorium permanent and was invited to the rally last week. He did not make it, it was said, because there were morning votes he did not want to miss.

 

One of those who did attend the rally said one speaker made the group’s purpose clear: “The reason we’re here is because retailers want to hold the legislation hostage over MFA.”

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