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Internet Tax Out Of The Question Despite US Reforms

by Mike Godfrey, Tax-News.com, Washington

23 December 2014


Ron Wyden (D – Oregon), the outgoing Senate Finance Committee Chairman and the author of the Internet Tax Freedom Act (ITFA), has said that proposals to reclassify Internet access services could not lead to the introduction of new taxes or fees on the Internet by the back door.

Wyden was discussing the ongoing debate in the US concerning "net neutrality," and, specifically, plans to reclassify the services of Internet Service Providers (ISPs) as "public utilities" and allow ISPs to apply certain usage restrictions, such as prioritizing one kind of traffic over another, or blocking or slowing down certain services.

There were concerns raised that such a reclassification would allow state and local Governments to place new fees and taxes on internet access. A policy brief from the Progressive Policy Institute (PPI), for instance, said that "US consumers will have to dig deeper into their pockets to pay for both residential fixed and wireless broadband services."

It said: "The average annual increase in state and local fees levied on US wireline and wireless broadband subscribers will be USD67 and USD72, respectively. And the annual increase in federal fees per household will be roughly USD17. Reclassification could add a whopping USD15bn in new user fees. The higher fees would come on top of the adverse impact on consumers of less investment and slower innovation."

Wyden, however, has said the proposals "would not invalidate" the ITFA, which has just been renewed for a further year and continues the moratorium on the imposition by state or local Governments of new taxes on Internet access until December 2015.

He said it would be illegal to tax the Internet: "The ITFA will protect the Internet from taxes regardless of how the FCC defines Internet access... The FCC could define the Internet as a series of tubes, and ITFA would still prohibit taxes," Wyden said, labelling any other conclusion "baloney."

TAGS: Finance | tax | business | law | fees | internet | legislation | United States | tax breaks | regulation | services | Communications | Providers | Tax

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