Congress Passes Local Internet Access Tax Ban

Legislation in Congress makes permanent a temporary prohibition on local internet taxing authority. 

As reported by Reuters, The U.S. Senate on Thursday passed legislation placing a permanent ban on states’ taxing Internet access, sending the measure to President Barack Obama for signing into law.

By a vote of 75-20, the Senate gave final approval to a bill toughening enforcement of U.S. duties on foreign goods, which contains the permanent extension of the “Internet Tax Freedom Act.”

For more information, see Congress approves permanent Internet access tax ban from Reuters.

The Internet Tax Freedom Act would also ban county taxes on Internet access services. Maryland counties do not currently tax Internet access services, but this law would remove any authority to do so in the future.

The measure, H.R. 644, the Trade Facilitation and Trade Enforcement Act included a provision to extend the Internet Tax Freedom Act (ITFA) indefinitely.

The National Association of Counties (NACo) opposed the provision because it will permanently prohibit state and local governments from collecting taxes on Internet access services—and preempt counties from setting their own tax policies.

As described by NACo,

State and county governments generally have the ability to establish local tax policies to address the needs of our local communities. NACo opposes any attempt to preempt that authority.

ITFA was originally designed to foster the then fledgling Internet in 1998 by temporarily suspending new taxes on Internet access and – out of respect for state and local government authority – it was set to expire after two years.

Subsequent extensions of ITFA were temporary as the original intent of the law was to compel Congress to periodically revisit whether the benefit of providing preferential treatment to one particular industry outweighed the cost of preempting state and local government authority. The Internet in 2016 is far more advanced than in 1998 and does not warrant the same level of protection it may have over a decade ago.

For more information, contact Mike Belarmino at mbelarmino@naco.org or 202.942.4254 at the National Association of Counties.

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