(Newswire.net — September 18, 2014) — A ban on collecting taxes on Internet access has been in place since President Clinton signed it into law in 1998 as a means to protect the newly born technology powering a booming Internet bubble.
Lawmakers have re-upped the measure three times, with the most recent renewal in 2007. The law also prohibits levies on discriminatory Internet-specific tolls on things like email or bandwidth.
House Republicans have added a short-term extension to the ban to a continuing resolution, a legislative package that will keep the government from shutting down until Congress can negotiate its next budget deal.
But just hours after the House passed its bill, a group of bipartisan senators, led by Sens. Dick Durbin of Illinois and Mike Enzi of Wyoming, introduced a new bill combining a 10-year tax ban with a more controversial effort that would boost the authority of states to tax online purchases from retailers like Amazon and eBay.
Anti-tax and open-Internet advocates remain optimistic that Congress will figure out a way to keep the Internet-access tax ban in place after the election, though if Republicans are due to retake the Senate, it could mean inaction until next year.
“We’re going to win either way,” said Katie McAuliffe, federal affairs manager at Americans for Tax Reform. “If it passes now, if it passes later, we’re going to win either way.”
Still, the moratorium has lapsed twice before—once for a month in 2001 and for 13 months beginning in 2003. Neither expiration prompted an open season from states rushing to start taxing consumers, but backers of a permanent ban say things might be different this time around.
The Internet is far more ubiquitous, for one, and some states might automatically start collecting taxes. In Montana, for example, state law would mandate that Internet access be taxed at 3.75 percent should the ban lapse, according to a report from the House Judiciary Committee.
What’s less clear is whether Congress will opt for a permanent extension of the ban or a temporary one, likely lasting 10 years. Even murkier is the fate of the push by some senators to combine a ban extension with online-sales-tax legislation.
Senate Finance Committee Chairman Ron Wyden has been a vocal opponent of the Marketplace Fairness Act, as well as a critical booster of a bill that would permanently ban access taxes.
“It is so important to reject approaches like the Marketplace Fairness Act that passed the Senate last year, which would fundamentally discriminate against states that do not levy a sales tax and against US companies versus their foreign competitors,” Chairman Wyden said. “It would amount to a body blow to online retailers and services across the country.”
Few in Congress want that ban to expire, but in the face of the looming deadline, lawmakers have decided to do what they do best: Punt.