While Congress is on recess for the next five weeks, there will be plenty of issues constituents will be talking about with their Representatives and Senators at town hall meetings and community centers. One topic that will hopefully garner attention during the recess is the Senate’s vote on the Internet Tax Freedom Forever Act. As urged in previous FSF blogs (see here and here), the Senate should pass the Internet Tax Freedom Forever Act, permanently banning state and local taxes on Internet access, well before the current tax moratorium expires on November 1st.
Within the Internet world, the term “digital divide” describes the separation between individuals online and offline, either because they cannot afford Internet access or have chosen not to connect. The Internet Freedom Forever Act is something both parties should support because taxes on any good or service raise the price and result in a decrease in the quantity demanded from consumers. As for the Internet, a price increase for access could push more people offline, or prevent them from going online in the future. Those most likely to be affected are low-income users, expanding the digital divide.
Without having to recite all the positive benefits of the Internet, it should be understood that any barrier that forces individuals to consume less of a positive good or service leads to lower economic growth, because individuals cannot prosper the way they would like. While supporters of an Internet access tax might conjecture that this tax will be absorbed by large Internet Service Providers (ISPs), such as Comcast and AT&T, this is simply not true. While ISPs may have to pay a small portion of the tax, most of the burden will be levied onto consumers.
Many Internet users know how many videos to stream, songs to download, pictures to upload, or webpages to visit in a given day or week to keep themselves happy. So an increase in price from an Internet tax might only result in one or two less weekly Facebook selfies for the median individual. But more importantly, individuals on the margin of Internet connection place a lower value on Internet access. Therefore, those who have not yet connected or just recently connected – often low-income individuals – will surely be impacted the most by imposition of an Internet access tax. The increase in price could push them onto the wrong side of the digital divide or even further away from connection if they were already offline.
This is why it is important that the Senate pass the Internet Freedom Forever Act.