Bill Introduced to Permanently Extend Ban on Taxing ISP Access

Mirroring House Bill, Legislation Would Also Prevent Duplicative Taxation of Internet Goods

Senators Ron Wyden (D-Ore.) and John Thune (R-S.D.) have introduced the Internet Tax Freedom Forever Act, which would permanently extend the current ban -- instituted under the Internet Tax Freedom Act -- on state and local taxation on Internet access service.

The Internet Tax Freedom Act was enacted in 1998 and has been extended three times since. It is currently scheduled to expire Nov. 1, 2014, so the new bill would make that moot.

Cash-strapped states and local governments are always looking for new revenue sources, but the bill would make sure that would not include taxes on access to the Internet. That would make sense given that the government has made a priority of promoting Internet access and adoption and keeping the cost down.

"Our legislation would make permanent the prohibition on Internet access taxes, would prevent multiple and discriminatory taxes on Internet commerce, and would promote Internet access throughout the country, which is especially important in rural areas of South Dakota," said Thune of the new bill.

The applause from industry was almost deafening.

"We applaud Senators Wyden and Thune on the introduction of the Internet Tax Freedom Forever Act," said the National Cable & Telecommunications Association in a statement. "Extending the Internet tax moratorium will protect consumers and small businesses from new and burdensome state and local taxes on Internet access. We look forward to working with members on swift passage of this legislation."

Broadband for America echoed the NCTA's sentiments.

“We applaud Senators Ron Wyden and John Thune for their leadership on these critical pieces of legislation, and urge Democrats and Republicans in Congress to act quickly to pass them," said the company, a coalition of more than 300 companies including NCTA, so the cable association was doubly represented. "Passage of a the Internet Tax Freedom Act will ensure that consumers’ access to broadband will continue to be protected from onerous local taxes and fees. Likewise, under the pro-consumer Digital Goods and Services Act will end duplicative taxation on a single digital download. The Internet must not be subject to arbitrary taxes on a state-by-state basis, which can discourage adoption, innovation and investment.

Wireless access providers were equally appreciative of the effort, which comes just a day before Congress is expected to adjourn until September. "T-Mobile applauds Senators Wyden and Thune for their leadership in protecting access to the Internet and ensuring it remains affordable for all consumers," said Tony Russo, VP for T-Mobile U.S. "The Internet remains one of the greatest job creators and growth engines for our national economy. The legislation introduced today will provide a permanent and predictable tax environment for businesses to grow, and promote further broadband adoption in all parts of America."

A separate bill that was voted out of the House Judiciary Committee last month would also prevent multiple taxation of goods sold over the Internet.