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House Bill To Axe US Internet Taxes Proposed

by Mike Godfrey,, Washington

02 February 2007

Legislation has been introduced into the House of Representatives to permanently extend the moratorium on internet access taxes and duplicative and discriminatory taxes on internet commerce.

"Americans across the country utilize the Internet for communication, commerce, business, education and research," observed Congresswoman Anna G. Eshoo (D - Calif), who introduced the Permanent Internet Tax Freedom Act of 2007.

"Because of the tremendous value it brings to all aspects of our lives, we need to encourage its usage and do everything we can to ensure that Internet access is universal," she added.

Congress first instituted the temporary moratorium in 1998 to encourage growth of online commerce. In 2004, Congress extended the moratorium for an additional three years, which is scheduled to expire in November of this year.

"Passage of this legislation will ensure, once and for all, that the growth of Internet access and e-commerce will not be hampered by unwarranted taxation," said Eshoo, a Member of the House Energy and Commerce Subcommittee on Telecommunications and the Internet.

According to Eshoo, a 2006 report by the Pew Internet and American Life Project demonstrated that 73% of those polled were Internet users, up from 66% in a similar 2005 survey, while in 2006 alone, online retail exceeded $100 billion, increasing 24% over 2005. However, Internet usage still lags behind in rural and lower income areas of the US, and the country has fallen from 4th to 16th in broadband penetration worldwide since 2001.

"In order to reverse this trend, we need to ensure that access costs are kept to a minimum. Prohibiting unnecessary access taxes will help accomplish this goal," Eshoo told the House.

"We also need to allow unfettered access to the products and new services that are only available through the Internet and prevent multiple layers of state and local taxes. Otherwise, we will open the door to a myriad of barriers to Internet commerce that will drive consumers from a web-based marketplace and stifle innovation," she argued.

A comprehensive report in our Intelligence Report series examining offshore e-commerce and online gaming is available in the Lowtax Library at and a description of the report can be seen at

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