Free Press Brands Title II Taxes a Hoax

Tells FCC ITFA Passage Should "Erase" Tax Reclassification Concern
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Free Press told the FCC Sunday (Dec. 14) that renewal of the Internet Tax Freedom Act (ITFA) should put to rest cable arguments that the reclassification of Internet access under Title II could mean a new tax hit for companies and consumers. Cable ops are sticking with their assertion.

The moratorium on Internet access service taxes in all but a handful of states passed as part of the omnibus appropriations bill and extends that moratorium at least through September of next year.

"This extension erases any concern that reclassifying Internet-access services under Title II of the Communications Act could lead to a new tax burden on consumers," Free Press told the FCC in a letter pointing out the holes Free Press sees in that tax argument, which was offered up by the Progressive Policy Institute, the National Cable & Telecommunications Association, and the American Consumer Institute (ACI), among others.

"Internet Service Providers currently pay taxes, as do many other businesses. Telecommunications services and public utility services also pay taxes, but generally higher rates. The Internet Tax Freedom Act does not change any of that," said ACI President Steve Pociask.  

"As a result, reclassifying broadband to a Title II regulation opens ISPs to higher rates of state taxes that are only applicable to public utility and regulated telecommunications services. These taxes include gross receipts taxes and property taxes, which are generally much higher for public utilities, compared to property taxes on other business.

"There should be no confusion that reclassifying will subject ISPs to increased property and gross receipts taxes," he said.

“The Free Press statement that 'Title II will not create any new taxes for broadband user' is blatantly false and contradicts Free Press’ previous acknowledgement that consumers could bear the burden of new USF fees if broadband is reclassified as a telecommunications service,” said NCTA in a statement. “Section 254(d) compels all telecommunications carriers to contribute to the Universal Service Fund. While the Commission could forbear from that obligation – a result we would fully support – that is the type of speculative regulatory action that Free Press discounts entirely. 

“As to state and local taxes and fees, we agree that ITFA should protect ISPs and their customers from many of these taxes and fees, at least through September 2015. But given past experience with state and local tax authorities, we have every reason to believe that an FCC decision to reclassify broadband as a telecommunications service will lead these authorities to revisit their treatment of these services and to explore ways of circumventing ITFA’s protections. If Free Press is really interested in hoaxes, perhaps it should look no further than its ongoing tirades against ISP-created fast lanes that do not exist.”

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