The WasteWatcher: The Staff Blog of Citizens Against Government Waste

House Passes Permanent Ban On Internet Taxes

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Consumers across America are increasingly using the Internet to shop, apply for jobs, perform schoolwork, and email one another.  In 2012, the Federal Communications Commission found in its annual report on advanced communications capabilities that 95 percent of Americans have access to broadband Internet services.  According to the International Telecommunications Union, 84.2 percent of individuals in the U.S. currently use the Internet.

In 1998, the Internet Tax Freedom Act (ITFA) was first enacted as a temporary ban on state and local taxes on Internet access.  The law also banned multiple or discriminatory taxes on Internet commerce.  The moratorium on these taxes has been extended three times, with the most recent extension occurring in 2007.  On November 1, 2014, the current moratorium expires.

On July 14, 2014, the Council for Citizens Against Government Waste asked members of the House of Representatives to support passage of H.R. 3086, the Permanent Internet Tax Freedom Act.  This legislation makes the ban on these taxes permanent, creating certainty for consumers that their Internet access will never be subject to taxation.  On July 15, 2014, the House of Representatives approved H.R. 3086 by voice vote.

During House debate on H.R. 3086, Rep. Zoe Lofgren (D-Calif.) stated “The moratorium is one of the reasons for the huge growth in the digital economy.  The Internet wouldn’t be what it is today without affordable Internet access.  And, by the way, this tax relief is not to companies.  It is to individuals who access the Internet.”

Rep. Doug Collins (R-Ga.) stated “This legislation ensures that no person is discouraged from accessing the Internet and experiencing its transformative power.  The Internet is a tool for democracy and education.  It is an outlet for free expression and the megaphone for those who were previously ignored.  It connects individuals and is a means for creating entrepreneurship.”

One of the many problems with taxing the Internet is that when something becomes more costly, people will engage in less of it.  As the economy will undoubtedly continue to be more digitally-focused, protecting users of the Internet from onerous new taxes is critical to continued job creation, economic growth, and social interaction.

H.R. 3086 now moves to the Senate for consideration, where a similar measure, S. 1431, the Internet Tax Freedom Forever Act was introduced by Senators Ron Wyden (D-Ore.) and John Thune (R-S.D.).

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