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Tuesday, October 16, 2007
Internet Access: a Tax-Free Zone?
This afternoon, the House passed H.R. 3678, a four-year extension of the moratorium on state and local internet access taxation. The vote was 405-2. Such opposition to the bill as was voiced came from those who sought a permanent moratorium.
From our perspective, the debate on this issue has been oddly one-sided.
Almost nowhere (outside the Center on Budget) is heard the case that the moratorium protects a now-thriving and robust industry that hardly needs or merits the protection and impinges on states' traditional authority to tax or regulate economic activity within their borders. After all, no one challenges the rights of those states whose internet access taxes have been grandfathered from continuing to impose these taxes.
Almost nowhere among those with the most to lose by a moratorium extension -- states and municipalities -- are arguments against the moratorium heard. So it is gratifying to see the editorial in today's Washington Post, "The Web Grows Up" address some of the aburdities in the pro-moratorium position adddressed head on:
The Internet is not in danger of being stifled by a few extra dollars tacked on to subscribers' monthly bills. The latest justifications for treating Internet services differently from clothing, food or numerous other goods and services that states and localities choose to tax is to spur the build-out of broadband access and reduce the "digital divide," the gap between the rich and poor when it comes to Internet access.
These arguments are bogus. The rates of broadband availability and household subscription to Internet services are no lower in the nine states that have Internet taxes than in those that don't... It is quite a stretch for providers that have fought the development of broadband networks by municipalities now to claim to be agitating on behalf of the underserved poor.
A voice of reason on this issue in the Senate, which will take up H.R. 3678 shortly, has been Sen. Lamar Alexander (R-TN), who cannot be tarred as an unreconstructed revenue raiser insensitive to the needs of American industry. Let's hope that Sen. Alexander's voice and reasoning can find a place in the public record, so that when the debate resumes in four years, it is not just another broken record.
Posted by Dana Chasin
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