House Passes Permanent Ban on Internet Access Taxes

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The House approved legislation by voice vote permanently banning states from taxing Internet access or placing multiple or discriminatory taxes on e-commerce.

H.R. 235, the Permanent Internet Tax Freedom Act, also known as PITFA, keeps the current moratorium on taxes on Internet access in place and extends it indefinitely. The original legislation that temporarily banned Internet access taxes, the Internet Tax Freedom Act, was first enacted in 1998 and extended five times with nearly unanimous support. In the previous Congress, the House also passed PITFA by voice vote (see House Passes Bill Permanently Banning Internet Access Taxes).

“We applaud the bipartisan passage of the Permanent Internet Tax Freedom Act today in the House,” said House Judiciary Committee chairman Bob Goodlatte, R-Va., Reps. Anna Eshoo, D-Calif., Tom Marino, R-Pa., Steve Chabot, R-Ohio, and Steve Cohen, D-Tenn., in a joint statement Tuesday after passage of PITFA. “PITFA is a necessary measure to keep Internet access free of taxation. Internet access drives innovation and the success of our economy. It is a gateway to knowledge, opportunity, and the rest of the world. The American people deserve affordable access to the Internet and the Permanent Internet Tax Freedom Act will help prevent unreasonable cost increases that hurt consumers and slow job creation.”

Proponents of taxes on online sales had pushed to tie the bill to the Marketplace Fairness Act, legislation that would make it easier for states to collect sales taxes from online merchants, in the previous Congress. While the Senate did pass the Marketplace Fairness Act in 2013, it never came up for a vote in the House. A group of Senators re-introduced the bill in March (see Senate Re-introduces Marketplace Fairness Act for Online Sales Taxes).

The Retail Industry Leaders Association, a trade group for large retail companies, reiterated its support for a legislative solution that addresses both the online sales tax loophole and the moratorium on taxing Internet access. “Main Street retailers across America agree with Senators Lamar Alexander, Mike Enzi, Dick Durbin, and Heidi Heitkamp that sales tax parity should be addressed as part of legislation extending the moratorium on taxing Internet access,” said RILA executive vice president for government affairs Jennifer Safavian in a statement. “Retailers support keeping Internet access tax free while closing the online loophole that essentially subsidizes online-only retailers against their brick and mortar competitors. It’s time for the government to take its thumb off the scale and give all retailers a fair shot to compete in the free market. Both pieces of legislation enjoy broad bipartisan support and should be part of a package that can be sent to the President’s desk this year.”

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