This week the House of Representatives is scheduled to vote on the Permanent Internet Tax Act (HR 235), which would ban state and local taxes on Internet access.
The current ban on Internet access taxes has been extended many times since it originated in 1998 (and is set to expire once again on October 1, 2015). But if this legislation passes, the ban would become permanent and discriminatory taxes on e-commerce would also be prohibited, according to this article in The Hill.
It is very important for consumers and Internet Service Providers that the House pass this legislation. Taxes imposed on any good or service raise the price, resulting in a decrease in the quantity demanded from consumers. Whether taxes are shifted on consumers or businesses, the elasticity of demand and supply allows for both sides of the market to inherit the burden, ultimately leading to less economic activity and growth.
Taxes on Internet access would be particularly regressive because it is often the poorest people that do not connect to the Internet. A tax on Internet access could push the price of broadband beyond many of the poorest consumers’ willingness to pay. Even if a person had not adopted broadband service prior to the tax being levied, the increase in price would make that person less likely to adopt. Raising the price of an Internet access would be counterproductive to the many government programs that aim to connect America’s poorest individuals.I commend Judiciary Committee Chairman Bob Goodlatte for introducing the Permanent Internet Tax Freedom Act and I urge the House to pass it.