WASHINGTON — The National Cable & Telecommunications Association scored a victory when the House voted last week to make the Internet Tax Freedom Act permanent.
The bill, which must still pass the Senate, was approved on a voice vote in the House with little opposition and almost 200 cosponsors from both parties. The ITFA, which initially passed in 1998 and was subject to re-authorization, prevents state and local taxes on Internet access and duplicative taxes on electronic commerce.
Mayors, governors and telecom officers had opposed making the bill permanent, while Internet-service providers, unsurprisingly, had strongly favored it.
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 Internet access, which could depress broadband adoption, particularly among lower-income households since a regressive broadband tax would hit those consumers hardest.
Judiciary subcommittee chairman Rep. Bob Good-latte (R-Va.), who helped spearhead the bill, pointed out that, as a share of income, low-earning households pay 10 times as much in communications taxes as high-income households do.
According to Goodlate, local tax authorities were champing at the bit to start taxing ISPs at the telecom rate as soon as the FCC’s new Title II regulations took effect — which happened on June 12, after the effective date was not stayed by a court.
The bill also would now prevent Internet access taxes in six states where such taxes are grandfathered.