ACTION ALERT on S 2084, the Internet Tax Ban Extension and Improvement Act
Local Governments Support the Alexander-Carper Bill

Last updated February 27, 2004

On February 12, 2004 Senators Alexander (R-TN) and Carper (D-DE) introduced the Internet Tax Ban Extension and Improvement Act as an alternative to the Internet Tax Non-Discrimination Act (S. 150), which would pre-empt local taxing authority and threaten billions of dollars in local tax revenues that pay for police, education, and other vital services and infrastructure.

The Alexander-Carper bill calls for a two-year extension of the existing Internet tax moratorium, allowing Congress, industry and state and local governments time to define new technologies and address their treatment under current tax laws. 

The bill also allows local governments to continue to levy existing taxes on telecommunications and rights-of-way and preserves the ban on email or Internet access taxes as well as multiple and discriminatory taxes.

While local government would prefer that the Internet Tax Freedom Act ("ITFA") not be revived, the Internet Access Tax Ban Extension and Improvement Act represents the next best alternative.

The bill was introduced on February 12 with 11 co-sponsors, including:

1) Alexander (R-Tn)
2) Carper (D-Del)
3) Dorgan (D-ND)
4) Feinstein (D-Ca)
5) B. Graham (D-Fl)
6) Hollings (D-SC)
7) Hutchison (R- Tz)
8) Inouye (D-Ha)
9) Lautenberg (D-NJ)
10) Rockefeller (D-WV)
11) Voinovich (R-Oh)

It was then referred to Senate Committee on Commerce, Science, and Transportation.

Take Action on S 2084

This bill to may come to the floor at any time. We encourage Local Governments to:

  • Contact their Senators, especially if they're on the Commerce Committee and urge them to co-sponsor S 2084 or, if it comes up for a vote, to vote for the bill.
  • Send us copies of any letters that you may send in support of the bill and we will add them to the website.

Resources

Text of the S 2084 as introduced HTML | PDF
February 12, 2004

Talking Points drafted by TeleCommUnity Consultants HTML | Word

TeleCommUnity letter sent to Senators Alexander and Carper in support of the bill
February 9, 2004

If your jurisdiction sends a letter, please send a copy to kristin@telecommunityalliance.org for this site

Senate and House Contact Information
Senate Contact information | House Contact information
Emails and fax numbers of Senate Finance and Commerce Committee members

News Reports and Stories

"Don't Be Fooled by New Internet Tax Bill"
A "Dear Colleage" letter co-signed by Senators Allen and Wyden
February 24, 2004

Report from the Debate between Senators Alexander and Allen at the Heritage Foundation
Technology Daily, February 12, 2004

NLC Supports Sens. Alexander, Carper Internet Access Bill
by Juan Otero, National League of Cities
February 16, 2004
NLC has an action alert ready to go here

NGA Supports Bill to Keep Internet Access Tax Free
National Governors Association Press Release
February 11, 2004

Senators seek to limit Internet tax moratorium
By Grant Gross, IDG News Service
February 12, 2004

How Did We Get Here?

Background materials about HR 49/ S 150, the Internet Tax Non-Discrimination Act
September – December 2003


Fiscal Impact
According to the Multistate Tax Commission, S. 150 will result in a loss of revenue to state and local governments of up to $8.75 billion annually by 2006 and could be even greater as right-of-way rents from non-tax franchise and access line fees are also lost. For every $1 billion state and local governments lose, our local communities will lose:

  • almost 20,000 police officers
  • almost 20,000 firefighters
  • more than 27,000 hospital workers
  • almost 25,000 teachers
  • more than 17,000 college instructors.

Under the Manager’s Amendment, the Congressional Budget Office estimates: elimination of the grandfathering clause will cost state and local governments between $80 and $120 million annually; revenue from DSL taxes, currently $40 million and expected to be $80 million by 2008, will be lost; and additional revnue losses as services migrate to the Internet (such as telephone service becoming Voice-Over-Internet-Protocol, VOIP, or sales of movies over the Internet) will be “substantial.” CBO further states that S. 150 will impose an unfunded mandate and is subject to a point of order. Sixty-four current members of U.S. Senate voted in favor of the Unfunded Mandates Act of 1995. TeleCommUnity urges all Senators to support vote against this multi-million dollar unfunded mandate and to support a point of order if raised on this issue.

Additional Background
The legislation began as a simple extension of the Internet sales tax moratorium, which was scheduled to expire November 1, 2003. HR 49/S 150 has been amended to make the tax moratorium permanent and to expand the types of services than cannot be taxed. Services for accessing the Internet that are taxable or subject to franchise fees today, such as dial-up telephone service, DSL and cable Internet services, would be exempt from taxes and potentially free from franchise obligations. While the Manager’s Amendment attempted to address some of these concerns, the rewording of the definition of “Internet access,” the elimination of an expiration date and the elimination of the grandfathering clause will still impose a multi-million, if not multi-billion, dollar unfunded mandate on state local governments.

The following associations are opposed to the Manager's Amendment and support the Alexander-Carper Amendment: TeleCommUnity, the National Governors Association, the National League of Cities, the United States Conference of Mayors, the National Association of Counties, National Association of Telecommunications Officers and Advisors, and International County and City Managers Association. TeleCommUnity urges all State and local elected officials, governments, and their associations to continue contacting Senators to express their opposition to S 150 and support for the Alexander-Carper Amendment.

Resources:

Talking Points About HR 49/S 150

Supporting Alexander-Carper HTML | Word
Opposing Manager's Amendment HTML | Word
Earlier talking points HTML | Word | Powerpoint slides

Statutes, Bills and Amendments

S. 150 Senate Floor Debate November 6, 2003 | November 7, 2003
Alexander-Carper Amendment
Manager's Amendment
S150 as amended
S 150 previous version
HR 49
House Report of HR 49
Internet Tax Freedom Act of 1999 47 U.S.C. § 151 note

Editorials and News Stories

Senate may move on bill to ban Net-access tax
By Declan McCullagh
CNET, November 21, 2003

Internet access tax battle heats up in Senate
Reuters/Forbes, November 20, 2003

Internet Needs No Subsidies
Editorial
Los Angeles Times, November 12, 2003

Click on 'Be Careful with Net Tax'
Legislation, ,as written, could deprive cities of other revenue desperately needed
San Jose Mercury News, November 11, 2003

No Reason To Hold Off Internet Tax
Editorial
Atlanta Journal-Constitution, November 10, 2003

Senators Banter Over Net Taxes
Proponents of a permanent ban on Internet access taxes hit a roadblock Friday, because the Senate can't agree on how to define 'Internet access.' They hope to reach a compromise next week.
Wired, November 8, 2003

Speakout: Barring tax on Internet access dams up local revenue stream
By Kathy Gilliland, Kathleen Mackenzie And Ken Fellman
Rocky Mountain News, November 8, 2003

Press Release: TeleCommUnity Alliance Applauds Growing Opposition
to Provisions of Internet Tax Moratorium
November 5, 2003

A Tangled Tax Web
Permanently banning Internet taxes may be smart politics, but it would deviate from modern tax policy and ignore issues of fairness.
Editorial
St. Petersburg Times, November 5, 2003

Free Ride on the Internet
Editorial
Bangor Daily News, November 5, 2003

Tax and Click
Editorial
Washington Post, November 4, 2003

Virginia governor says bill too broad
Allen seeks permanent ban on taxing users' access to the Internet
By Peter Hardin
Richmond Times Dispatch, November 3, 2003

Are taxes on the way for Net access?
By Declan McCullagh
CNET, November 3, 2003

Congresswoman goes on offensive over fear of e-mail tax
By Richard Powelson
Knoxville News, October 31, 2003

Accessing the Internet
Editorial on S 150 by Sen. George Allen
Washington Times, October 24, 2003

Press Release: TeleCommUnity Objects to S.150 and Praises Sen. Alexander’s Statement
October 24, 2003

Identity Crisis
Internet Services Challenge Definition Of 'Phone Company'
By Yuki Noguchi
Washington Post, October 23, 2003

Hill Hurrying to Renew Ban on Web-Access Taxes
States, Local Jurisdictions Worry About Loss of Revenue
By Jonathan Krim
Washington Post, October 21, 2003

NATOA Press Release in Response to Senator Wyden's floor statement about local governments wanting to "tax email"
October 20, 2003

End Unfair Tax Dodge
Editorial
The Oregonian, September 30, 2003


Reports and Studies

Congressional Budget Office's Cost Estimate on Manager's Amendment
November 5, 2003

Center on Budget and Policy Priorities Report
 "Making the Interent Tax Freedom Act Permanent in the Form Currently Proposed Would Lead to a Substantial Revenue Loss for States and Localities"
October 20, 2003
Read Executive Summary | Download the 34-page report

MultiState Tax Commission Study
September 24, 2003
read study's press release | download MTC's study

NARUC Concerns with S 150 As Amended
September 2003

Media Access Project Study
What's In a Name? Plenty: Effects of the "Internet Tax Non-Discrimination Act" on Regulatory Classification of Internet Access Service
September 26, 2003

Congressional Budget Office Cost Estimate
starts on page 13 of the House Report on HR 49
July 24, 2003

Representatave Sample of Letters Sent Opposing HR 49/S 150

TeleCommUnity letter sent to Senate Commerce Committee members
August 29, 2003

Letter from the Mayor of Portland sent to Senators Smith and Wyden expressing concern about HR 49/S 150
September 5, 2003

Letter from the "Big 7" to members of Congress regarding concerns about HR 49/S 150
September 17, 2003

Letter from the Mayor of Dallas sent to Senator Kay Bailey Hutchison expressing concern about HR 49/S 150
September 26, 2003

Letter from the Chairman of the Fairfax County, VA Board of Supervisors sent to Senator Allen expressing concern about HR 49/S 150
September 30, 2003

Letter from the Mayor of Ventura, CA sent to Senators Boxer and Feinstein expressing concern about HR 49/S 150
October 1, 2003

Letter from the Mayor of Lake Oswego, OR sent to Senator Wyden expressing concern about HR 49/S 150
October 10, 2003

Letter from the Virginia Association of Telecommunications Officers and Advisors (VATOA) sent to Senator Allen expressing concern about HR 49/S 150
October 14, 2003

Letter from the US Conference of Mayors signed by 29 mayors and sent to Senator Grassley expressing concern about HR 49/S 150
October 14, 2003

Second letter from the Mayor of Portland to Senators Smith and Wyden indicating increased concerns about impact of HR 49/S 150 following the 9th Circuit Decision on cable-modem
October 14, 2003

if your jurisdiction has sent a similar letter and you'd like it posted on this page, please email a copy to us (MS Word, PDF or text file).


Model letters

Sample Letter in Opposition to anything but extension of the current law
read letter | download text of letter as a word doc

Sample Rights-of-Way/Tax letter
read letter | download text of letter as word doc

Sample Revenue Impact letter
read letter | download text of letter as word doc

Sample Protect Our Tax Revenue letter
read letter | download text of letter as word doc