Internet tax ban likely to become permanent

A proposal to permanently prevent states from taxing access to the Internet is included in a broader bill expected to pass Congress. 

Extending the tax ban indefinitely would be a key victory for lawmakers who have tried for years to remove the sunset date on the 1998 ban, which has required several extensions. 

{mosads}The Internet tax ban has been added to the conference report for customs and trade enforcement legislation negotiated by the heads of the tax-writing committees in both the House and Senate. It is soon expected to get a vote.  

The permanent Internet tax ban has been a key focus of Sen. Ron Wyden (D-Ore.), the ranking Democrat on the Finance Committee. 

“I co-wrote the Internet Tax Freedom Act nearly a decade ago to help spur the growth of the digital economy,” he said in a statement.

“Today online commerce is responsible for hundreds of thousands of jobs. In my view, when you have something that works, that has stood the test of time, you ought to make it permanent.”

The ban forbids states or local government from taxing the monthly payments that Internet subscribers dole out to companies, such as Comcast, that provide service.

The House and Senate overwhelmingly passed their own versions of customs legislation earlier this year. On Wednesday, negotiators announced a deal to merge the two bills and get it to the president’s desk. 

“Congress is expected to soon vote on the conference report and send it to the President’s desk to be signed into law,” the House Ways and Means Committee said in a statement. 

The stand-alone Internet tax ban that is included in that package has received wide support from both parties in past years and is largely non-controversial. The legislation has 50 cosponsors in the Senate and 191 cosponsors in the House. 

But it has stalled in past years as some members attempted to tie the measure to a more controversial online sales tax bill, which would give states the power to collect a sales tax from businesses that don’t have a physical presence in their boundaries. 

Tying the two items together faced resistance in the House last year and would have proven harder in the current Congress, now that Republicans control the Senate.

A grandfather clause in the original ban allowed states to continue collecting Internet access taxes if their laws were in place before the 1998 law. Seven states are grandfathered into the system and collect more than a half billion off it each year. 

That grandfather clause will be phased out over the next four years.