Internet Tax Issues Continue

Over the years the growth of society has been marked by the increase and dissemination of new knowledge. This would make the single most important resource in the world information. Information is the currency of the United States and the power of the Internet. Knowledge once locked away in books has now been made available to anyone with a computer and Internet access. Now Congress is asking if citizens of the United States should pay taxes to the government for the privilege of access the information superhighway.

The Internet Tax Nondiscrimination Act was signed into law on December 3rd 2004 by President George W. Bush. Taxation of Internet access was prohibited by this law in the US until November 2007. Congress agreed last week to continue this ban on all new Internet taxes when both houses passed their own moratorium. Although Congress agrees Internet access should remain tax free, they can’t agree on how long this should last. The Senate is calling for a law that will keep the Internet tax free for seven years, while the house is only asking for four years. A joint committee is currently working out these differences and it is commonly believed that President Bush will sign this legislation into law when a time frame is agreed upon.

Many legislators are calling for a permanent ban on Internet access, including a measure sponsored by Sen. Ron Wyden, D-Ore. And this measure is far from alone. An increasingly powerful group that calls itself "Don't Tax Our Web" is calling for an indefinite ban on Internet tax. This group has the support of Google, Amazon.com, the National Association of Manufacturers, and Corning. In support of tax free Internet access Senator Ted Stevens said, "The Internet has provided a powerful economic boost to our nation, and has become an important everyday tool for millions of Americans. By keeping Internet access tax-free and affordable, Congress can encourage Internet use for distance learning, telemedicine, commerce and other important services."

An American Cable Association representative urged members of Congress to renew the Internet tax moratorium on Wednesday by saying that new taxes would make it more difficult for Cable Internet companies to expand services to rural customers. This was a strong argument as expanding broadband access to rural areas has been a priority for the FCC and Congress.

Presidential hopeful John Edwards recently sent a letter to the FCC concerning the Internet and the auction of the 700megahertz slice of the broadband spectrum. In the letter Edwards writes, "In recent years, the Internet has grown to touch everything and transform much of what it touches. It's not the answer to everything, but it can powerfully accelerate the best of America. It improves our democracy by making quiet voices loud, improves our economy by making small markets big, and improves opportunity by making unlikely dreams possible." It would be difficult to refute these comments, as the impact of the Internet is profound and obvious. What is unclear is how much impact a tax on the service would actually have. How many current Internet service customers would cancel their service if it became taxed? Surely some would, and the major portion of cancellations would probably come from the poor, a demographic that already suffers from a lack of education and knowledge.