The Internet Tax Freedom Act and the “Digital Divide”
Source: Center on Budget and Policy Priorities

Congress is again considering whether to make the “Internet Tax Freedom Act” (ITFA) permanent. Enacted in 1998 and temporarily renewed in 2001 and 2004, ITFA banned new state and local taxes on “Internet access” services. States and localities were barred from imposing their sales taxes on the typical $10 to $50 monthly fee that companies like AOL, Comcast, and Verizon charge their customers for connecting them to the Internet, enabling them to use communications services like email and instant messaging, and providing them with proprietary content like news summaries and movie clips.

ITFA sunsets on November 1, 2007, and legislation has been introduced to make it permanent. The “Permanent Internet Tax Freedom Act” (S. 156/H.R. 743) is sponsored by Senator Ron Wyden and Rep. Anna Eshoo.

This report examines whether a permanent ITFA is necessary to encourage the spread of high-speed (“broadband”) Internet access services and to help close the “digital divide.” (The adverse impacts that a permanent ITFA would have on state and local services, as well as other flaws in the proposed legislation, are discussed in a previous report, available at www.cbpp.org/7-11-07sfp.pdf.) (139 KB)

This entry was posted on Friday, September 14th, 2007 at 9:06 am and is filed under Business and economics, Government and politics, Internet, Social and cultural issues, Taxation. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.