Jan 04 2007
Mr. President, I am pleased to join with Senators WYDEN and SUNUNU in introducing the Permanent Internet Tax Freedom Act of 2007. This bill would ensure that consumers never have to pay a toll when they access the Information Highway. Whether consumers log onto the Internet using cable modem, DSL, dial-up or wireless services, under this bill, they will not be taxed by any State or local governments for their Internet usage.
Keeping Internet access affordable to all Americans is a worthy policy goal. The Internet has become a fixture and core component of modem American life that has created and continues to generate social and economic opportunities throughout the United States.
In 1998, Congress put in place a temporary ban on any State or local taxes on Internet access. Additionally, Congress placed a moratorium on multiple or discriminatory State and local taxes on e-commerce transactions to ensure the growth of online commerce. This moratorium was extended in 2004, but is set to expire November 1, 2007. Our legislation, the Permanent Internet Tax Freedom Act of 2007, would make the moratorium permanent.
Today, the U.S. ranks 12th in the world in per capita Internet access, lagging behind competitors South Korea, the United Kingdom and Canada. This is absolutely unacceptable for a country that leads the world in technical innovation, economic development, and international competitiveness. We certainly cannot afford to make Internet access more difficult to obtain if we want to become more internationally competitive.
There is little doubt that the development and growth of the Internet was aided by the tax moratorium. In 1998, the year the moratorium was first enacted, 36 percent of U.S. adults reported using the Internet. In 2006, that number grew to 73 percent, an all time high according to an April 2006 Pew Internet & American Life Project Report. However, the report also found that Americans in the lowest income households are considerably less likely to be online. Just 55 percent of adults living in households with less than $30,000 annual income go online, versus 73 percent of those whose income is between $30,000-$50,000. This ``digital divide'' needs to be closed immediately. Continuing Congress's policy of reducing the cost of Internet access, by preventing the service from being taxed, is one step we can take now to close the ``digital divide.''
As use of the Internet has grown, so has e-commerce. According to the most recent comScore Networks report, Americans spent over $100 billion on Internet purchases during 2006, a major milestone for retailers and the World Wide Web. This legislation would ensure that online transactions are not taxed by cities or States at a rate higher than other sales transactions. Again, the goal of this legislation is to make the Internet affordable to all Americans and foster the growth of the Internet.
With respect to the question of whether it is wise to make Internet access tax free, Congress has a long history of giving tax incentives to commercial activities that we believe help our society. The Internet is a technology that is a source of and vehicle for significant economic benefits. The proponents of this legislation strongly believe the Internet clearly merits the tax incentives provided by this bill.
I recognize that there are some who wish to continue to make the Internet tax moratorium temporary. Their premise is that the Internet will continue to evolve and thus Internet access may develop into a service the States and localities would wish to tax. I believe that this moratorium should be permanent to continue encouraging those very Internet-related innovations. By making the moratorium permanent, businesses that invest in and provide Internet access will be able to operate in a predictable tax environment. This will result in continued investment in this very important social, political and economic medium.
Congress now has the opportunity to extend permanently the Internet tax moratorium and assure consumers that taxes will not inhibit the offering of affordable Internet access. By supporting this legislation, we can continue to promote Internet usage by Americans as well as encourage innovation relating to this technology. For these reasons, I ask my colleagues to support this pro-consumer, pro-innovation, and pro-technology bill.