“A pre-emptive strike against commerce-strangling taxation,” Schatz calls it 

(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) today praised the Senate for voting to restore a ban on taxation of Internet access at all levels of government.  The Internet Tax Nondiscrimination Act, S. 150, forbids state and local governments from imposing new taxes on Internet access for four years, but stops short of repealing internet taxes already in place.  Senate Commerce Committee Chairman John McCain (R-Ariz.) advanced the four-year extension as an alternative to a House bill that bans taxes permanently.  A previous moratorium on Internet taxes expired six months ago.

“Although we prefer the ban to be permanent and retroactive, the Senate version is an acceptable compromise,” CCAGW President Tom Schatz said.  “Americans are already overtaxed; instead of digging deeper into taxpayers’ wallets, state and local governments should be finding ways to cut wasteful and unnecessary spending.”

President Bush supports a permanent ban on taxing Internet access.  Such a ban passed the House last year but stalled in the Senate.  Opponents of the tax ban say it could deny state and local governments billions of dollars in tax revenue.  They complain that the bill bans taxes not only for residential users, but also for telecommunications companies that buy and sell the high-speed data lines.

 “There is no difference between a tax on residential users and a tax on the telecommunications companies that own the data lines,” Schatz continued.  “Imposing a tax on Internet providers will force them to raise prices on consumers, which would have a stifling effect on the economic activity surrounding the Internet.”  

“Furthermore, a tax ban does not constitute a ‘loss’ for government officials because the money was never theirs to begin with,” Schatz continued.  “It keeps money in the hands of people who earn it.”

Ten years ago, most people had never heard of the Internet.  Today, more than 60 percent of Americans have Internet access and 40 percent have been online for more than three years.  According the Pew Internet Project, the World Wide Web has become a major source for seeking health, religious, career, financial, sports or political information.  Americans report that using e-mail enhances their connection with family and friends.  Older Americans, minorities and those with modest incomes are less likely to have Internet access than those with college educations and incomes of over $75,000.   

“Unfortunately, many politicians see the Internet as a hidden gold mine, ripe for taxation,” Schatz concluded.  “Taxing Internet access will hurt the continued growth of this valuable communication tool and especially harm low-income families and minorities in their ability to become ‘wired.’”

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.