Internet tax ban moving forward

PUBLISHER’S NOTE: Please note that, as of 9/29/03, all of your valued Network World Fusion newsletters will be delivered to you from nwfnews.com. If you use filters to manage your newsletters based on domain name, please adjust accordingly.

A ban on Internet-only taxes is making its way through Congress. The House of Representatives put its stamp of approval on the bill while the Senate has yet to vote on the measure.

The bill calls for a complete ban on all taxes that would appear discriminatory toward business on the ‘Net such as bit taxes, e-mail taxes and bandwidth taxes. These are all seen as harmful to the growth of online business.

Not included in the bill, however, is a ban on Internet sales tax. Bricks and mortar stores have argued that including this would be unfair to stores with a physical presence. Currently, customers do have to pay sales tax on items as they would if they ordered from a catalog or bought something in a store.

In essence, the legislation, which is titled “The Internet Tax Non-Discrimination Act,” targets only Internet access – not the sales across the Internet link. The hope is to not encumber in any way the use of the Internet as a means to do business.

The bill’s passing through the House follows on a three-year moratorium that was extended two years ago. At the time, lawmakers called for a study of the effect of taxation on the Internet.

Christopher Cox (R-Calif.) served as a co-author of the original moratorium and is taking a lead role in getting this legislation through.

He said in a statement that taxing access to the Internet and its various applications would be counterproductive. “Widespread adoption of high-speed Internet connections would add an additional $500 billion to U.S. gross domestic product in each of the next 10 years according to a recent study,” he said. “New taxes would make Internet access even less affordable, and discourage the adoption of broadband connections. Punishing Net users with a new monthly tax on Internet access, whether dial-up or broadband, shouldn’t be anybody’s idea of pro-consumer policy.”

He added: “…We all agree that it would be counterproductive to create new taxes that target the Internet, which are harmful to consumers, destructive to technological innovation, and bad for our economy.”

What do you think? Should access to the Internet be taxed? Or is it a barrier to the success of online efforts? Let me know at sgittlen@nww.com