Talking Points on HR 49/ S 150
"Internet Tax Non-Discrimination Act"
A Threat to Local Governments' Fiscal Health and
Right-of-Way Management Authority
September 25, 2003
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WHAT THE BILLS DO – The
Internet tax moratorium, set to expire on November 1, 2003, prohibits
taxation of internet access providers but permits taxation of telecommunications
services when used to access the internet, and preserves local governments’
authority over cable franchising. HR 49/S 150 would make permanent
the tax moratorium and expand the types of services that cannot
be taxed. Services for accessing the Internet today that are taxable
or subject to franchise fees – such as dial-up telephone service,
DSL and cable Internet services – would be exempt from taxes
and potentially free from franchise obligations.
WHY THESE BILLS NEED TO BE DEFEATED–
The proposed expansion to prohibit taxation of telephone and cable
modem will not promote broadband deployment, will result in a give-away
of public assets to private enterprises, and could cost state and
local up to $8.75 billion annually
by 2006. The legislation also creates a tax incentive to migrate
voice telephony to the Internet, where neither taxes nor universal
service fund fees are collected.
WHY THE EXPANSION IS NOT NECESSARY–
Telephone companies have paid taxes in return for the privilege
of doing business in states and communities for over 100 years and
yet 98% of homes have a telephone. Cable companies has paid franchise
fees in return for the privilege of using public rights-of-way for
more than 30 years and yet they reach 97% of all homes, 90% of which
have cable modem capability. State and local taxes have not retarded
the deployment of technologies to access the Internet.
WHAT CAN THE CONGRESS DO? – The current moratorium
could be extended for an additional number of years while Congress
continues to work with states and local government to address Internet
taxation issues.
For More Information: http://www.telecommunityalliance.org/issues/internettaxation.html
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