House Votes to Permanently Ban Taxes on Internet Access

by Greg Markle, Generation Opportunity, June 10, 2015

The House voted June 9, 2015 to pass the Permanent Internet Tax Freedom Act which would ban states from taxing Internet access, extending a moratorium first created in 1998 that was set to expire in October. The renewed ban would not have an expiration date.

The previous moratorium allowed seven states that already taxed Internet access before 1998 to keep their tax, but if passed, the new rules would require those seven states repeal all taxes on Internet access. So those living in Texas, Ohio, Wisconsin, Hawaii, New Mexico, North Dakota, and South Dakota would expect a smaller bill for their Internet access.

While that sounds great, the debate over banning taxation on Internet access has provoked a renewed conversation on state Internet sales taxes. The Retail Industry Leaders Association, used the bill’s passage as an opportunity to call for legislation allowing states to tax Internet sales. The National Governor’s Association explained:

We are very disappointed that the House of Representatives has chosen to take up the Permanent Internet Tax Freedom Act before discussing the tax issue of greatest importance to states — the need to create parity between in-state and out-of-state retailers regarding the collection of state and local sales taxes.

In other words, the extension of one ban on taxes is leading many special interest groups to demand more taxes in another area as a compromise.

The Permanent Internet Tax Freedom Act now goes to the Senate, where some senators have opposed making the ban permanent on a federal level. While some senators have shown support in the past, the newly-elected Congress might have a different take on this issue – and the fate of this legislation is up in the air.

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2014: House Bill Could Free Hawaii Consumers from $20M Internet Tax

2014: Ban on Internet Access Taxes Could Produce Tax Cut for Hawaii

2015: HR235: Eliminate Hawaii Internet Access Taxes