With the United States House of Representatives having already passed the Permanent
Internet Tax Freedom Act (PITFA), which would permanently extend a moratorium on
internet access taxation, a coalition of 42 state and national organizations have
come together to urge the Senate to pass equivalent legislation as soon as
In a letter to all senators, the coalition's members say that failure by the Senate to act before November 1 this year, when the present
moratorium expires, will lead to increased taxes for internet consumers, who
are currently protected "from increased costs when accessing
and using the internet, and from the discriminatory or duplicative taxation
The letter adds that "taxes on communications services are already punitive
and discriminatory. The average sales tax rate on voice services is 17 percent,
and 12 percent on video services, while the average general sales tax rate is
7 percent. Excessive taxes will hinder continued growth in the digital space."
It also notes that the Federal Communications Commission FCC's National Broadband
Plan already states "that the largest barrier to consumer adoption and
expanded use of internet based services is cost."
"Allowing the internet access
tax moratorium to lapse would certainly lead to higher tax rates on consumers
and thus reduce the rate of adoption and innovation. Higher taxes on internet
access undermines American economic competiveness and growth," it continues.
However, prior to the summer recess, the prospect of a "clean" equivalent
to the PITFA being passed in the Senate was being complicated by certain lawmakers
looking to link it with the more controversial Marketplace Fairness Act (MFA),
which would allow states to impose sales taxes on online purchases, and which
remains stuck in the House Judiciary Committee.
The MFA has become bogged down in the Republican-led House, where it has encountered
a great deal of opposition and delay, mainly due to an aversion to what is considered
to be a hike in taxation and an increase in tax compliance burdens on smaller