US Congress Passes Ban on Internet Access Tax

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A decision by the US Senate on Thursday to pass a permanent ban on Internet access tax as part of a customs enforcement bill was hailed by telecom trade association USTelecom as a victory for US consumers and the digital economy. The bill was passed by a bi-partisan 75-20 vote, and now awaits Presidential approval.

The bill includes changes to the US Customs and Border Protection Agency, intellectual property protections and government measures to reduce currency manipulation. It also bans collection of taxes on Internet access at the state and local levels, and applies to some digital goods, Yahoo reports.

“With today’s vote, American consumers will never again face the threat of new onerous taxes on their broadband bill,” USTelecom President Walter McCormick said in a statement. “The bipartisan legislation, when signed into law, will protect millions of Americans from discriminatory taxes on Internet access and encourage further innovation, investment, and increased broadband adoption. We commend Senators Thune, Wyden, Hatch and Majority Leader McConnell for their leadership on this bill making the tax ban permanent, avoiding the need for periodic renewals.”

The Hill reports that Senator Dick Durban (D-Ill.), who blocked its passage last year, allowed the legislation to move forward after reaching a deal with Senate Majority Leader Mitch McConnell (R-Ky.) to advance separate legislation enabling states to collect sales tax from online retailers later in the year. An earlier version of that legislation, the Marketplace Fairness Act, passed through the Senate only to stall in the House in 2014, where it remains.

Senators at the time though to pass the Marketplace Fairness Act by tying it to an extension of the Internet Tax Freedom Act, which has placed a moratorium on Internet access tax continuously since 1998, except in seven states with grandfathered taxes. Those states will now lose over $500 million in annual tax revenue, according to Forbes.

Chicago created controversy by instituted a tax on streaming entertainment in 2015, which could possibly be applied to other digital services.

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