Internet Access Taxes

Woman on phone using computer

The use of Internet technology is one of the key drivers of economic growth, innovation and the spread of information today. Keeping the Internet accessible makes a world of difference to Americans of all races, ethnicities and socio-economic status. It is a critical gateway to education, healthcare, jobs and entrepreneurial opportunities, allowing Americans from all walks of life to equally participate and compete in today’s global economy.

However, taxes on Internet access can be a barrier to adopting this valuable tool and the enriching connections it offers. This is particularly troubling in light of the extremely high rate at which other communications services are already taxed:

  • Telephone and voice services are taxed at more than 17% on average.
  • Cable and video taxes are about 12% on average.
  • For perspective, the average sales tax is only 7%.

Those communications taxes are imposed by more than 10,000 different state and local taxing jurisdictions across the nation. We can’t let them pile on even more state and local Internet access taxes and fees!

Help From Congress: The Internet Tax Freedom Act

The Internet Tax Freedom Act (called the Internet Tax Freedom Forever Act of 2013 (S. 1431) in the Senate and the Permanent Internet Tax Freedom Act of 2013 (H.R. 3086) in the House) is pro-consumer legislation that was originally passed in 1998 to impose a temporary moratorium on certain taxes that could have a detrimental effect on the continued expansion of Internet use in the United States.

The moratorium has been incrementally extended over the years, and the ban on Internet access taxes was due to expire on November 1, 2014. Thankfully, Congress temporarily extended the Internet Tax Freedom Act through December 11, 2014.

However, this extension is only a short-term fix. When Congress returns to session in November, it must continue its support for fair and affordable Internet access by banning Internet access taxes through a permanent extension of the Internet Tax Freedom Act.

What the Legislation Does

  • Prevents Internet access taxes at the state and local levels
  • Prevents state and localities from imposing multiple and discriminatory taxes on Internet commerce.
  • Ensures only one state can tax each transaction.
  • Prevents online sales from being taxed at a rate higher than in-person sales.

Despite the fact that the FCC National Broadband Plan says that cost is the largest barrier to consumer broadband adoption, without the Internet Tax Freedom Act, the ban on Internet access taxes will expire, and the state and local taxes that are already applied to other communications services could be expanded to include Internet-access, increasing the cost of service.

What You Can Do

Encourage your U.S. Senators and Representative to keep Internet accessible for all and to ensure Internet commerce will remain unhindered by discriminatory, duplicative taxes. Tell them you want them to support a permanent extension of the Internet tax moratorium.

Take action now!