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Sen. John J. Sununu (R-NH)
Member, Cmte. on Commerce, Science & Transportation
Most Americans look to the Internet and see an engine for innovation, productivity, and economic growth. Unfortunately, in Washington some people see success and ask only one question: How can we tax it?
Unless Congress acts, tax collectors nationwide won't have to wait much longer to decide. The current ban on Internet access taxes, double taxation, and taxes that discriminate against Internet purchases will expire November 1, 2007. To permanently extend the moratorium, I joined Sens. Ron Wyden (D-OR) and John McCain (R-AZ) in introducing the bipartisan Permanent Internet Tax Freedom Act.
The future of the Internet-and Americans' ability to access the Web-is on the line. Lawmakers must work together now to permanently bar Internet access from being singled out as a new revenue source by local and state jurisdictions. Given the national importance of this network, there is no justification for such local micromanagement.
The power to tax is the power to destroy. The effect of new taxes on the Internet would be felt by individuals and businesses alike: higher costs and reduced access for lower-income Americans, decreases in online commerce, diminished investment in new technology, and disincentives for the deployment of new broadband infrastructure.
Failure to extend this ban could sharply limit the Internet's otherwise bright future. Politicians must stop using Internet taxation as a political football and give up the misguided notion that we should preserve the "option" to tax the Internet. We must enact a permanent ban that removes the specter of taxes on this economic engine. |
Mike Rounds
Republican Governor, South Dakota
Governors, like business owners, don't like being told by Washington how to run their organizations. This is especially true when it comes to managing state revenues. Unlike the federal government, governors must balance state budgets. When Congress insists on interfering with state revenue systems, it should do so carefully to avoid unintended consequences or further trampling on state sovereignty.
When it comes to extending the Internet access tax moratorium, the National Governors Association is calling on Congress to follow three principles: be clear-definitions matter; be flexible-a temporary solution is better than permanent confusion; and do no harm-preserve existing state authority and revenues.
The existing moratorium uses a 1998 definition for Internet access that is outmoded and bad for competition. It suggests that any service provided over the Internet and packaged with access becomes tax free.
The moratorium was never intended to give businesses operating over the Internet an advantage over their brick-and-mortar competitors. Rather, it was meant to serve as a temporary catalyst for what is now a robust online economy.
The moratorium must be modernized to preserve a level playing field for business and limit its intrusion on state authority. A bipartisan bill introduced in the Senate reflects governors' thinking. The ITFA Extension Act of 2007 (S. 1453) updates the original 1998 definition of Internet access, preserves existing taxes, and extends the moratorium for four years. This well-reasoned approach balances state and local government concerns with calls to continue the moratorium. |
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