The U.S. House of Representatives has voted to extend an
Internet tax moratorium for four years, despite calls from the tech
industry to permanently bar state and local governments from taxing Internet
access. The House voted to extend the moratorium on taxes on Internet access
fees and “other taxes unique to the Internet” until November of 2011. Senate
and Presidential action on the bill is still pending.
This ban can best be described as much ado about nothing.
Since its passage in 1998, Congress continues to waffle on the issue,
reenacting the moratorium several times since its inception. You can read more
about the history and current status of Internet tax issues in Taxing the
Internet: Analyzing the States’ Plan to Derive Online Sales Revenue, written by
CyberLaw’s Principal Attorney Eric Menhart.
The moratorium on Internet taxes applies only to very
marginal taxes, at best a few dollars a month per Internet access subscriber.
Virtually every member of Congress tends to vote to increase the moratorium on
taxes each time it is scheduled to expire. So why is it such a big deal?
Politically, extending the tax moratorium looks very good. Every member of
Congress can point to their individual vote as promoting technology and
preventing taxes. While it means virtually nothing to consumers’ pocketbooks,
it means much more to elected officials.
While the moratorium is a fun issue to discuss and debate, its real world
importance is not impressive. It is primarily a tool to impress the voters.