Policy Documents

Research & Commentary: Internet Access Taxes in Louisiana

James G. Lakely –

It is disheartening to see the Louisiana House nearly unanimously approve a tax on Internet access with the specious claim it is necessary to protect “the children.”

House Bill 569, which passed the House in late May by a vote of 81 to 9 and was moved to the Senate the week of June 8, would impose a 15 cent tax on the bill of every Louisianan who pays for Internet access. The tax, supporters say, would raise $2.4 million for state Attorney General Buddy Caldwell’s “Internet Crimes Investigation Fund.” The money is needed, according to Caldwell, to investigate cases of child pornography, other online sex crimes, and Internet fraud. “I don’t think that 15 cents per month is too much to ask for our children’s protection,” said state Rep. Simone Champagne (D-Jeanerette).

Preventing the exploitation of children is certainly a worthy goal, but Caldwell should find room in his current $18 million budget to fight that scourge. After all, not every crime warrants its own exclusive funding mechanism, at least not in a responsible budget. It’s not too much to ask legislators and administrators to fulfill their duties without using “the children” as a shield behind which to hide when raising taxes.

Legislators also should make sure to ask how effective and practical state law enforcement efforts at fighting child pornography can be. Most perpetrators traffic in images that cross state lines over the Internet, which puts the cases under federal jurisdiction.

The law also is likely to be struck down after an inevitable legal challenge, one that will cost the state money to defend against. The federal Internet Tax Freedom Act, renewed for seven years in 2007, put a moratorium on taxing Internet access for the worthy purpose of facilitating affordable personal Web access. Supporters of HB 569 can call it a “fee” all they want, but by any legal definition, it is clearly a tax.

That the proposed tax is only 15 cents a month should be little comfort to Louisianans, who would no doubt soon watch their state legislators justify increasing the tax to fund all sorts of other projects.

State Rep. Austin Badon, a Democrat from New Orleans, rightly asked during the debate: “Today it’s Internet access. Tomorrow, what’s it going to be, a subscription to DirecTV?” Actually, additional taxes on satellite services already have been imposed in several states, with others lining up behind them.

The following articles discuss Internet taxes in more depth, providing background and insight for readers interested in learning more about this issue.

Renew the Internet Tax Freedom Act
The Competitive Enterprise Institute urges Congress to renew the Internet Tax Freedom Act because “American taxpayers could be exposed to countless new and onerous taxes from states and municipalities simply for accessing the Internet.”

The Economic Impact of Taxing Internet Access
Heritage Foundation researchers Norbert J. Michel and William W. Beach present an economic analysis predicting that taxing internet access would reduce GDP, disposable income, and employment.

A Scare for the Web: Will Congress Let the Internet Tax Ban Expire?
James L. Gattuso of The Heritage Foundation explains why the federal ban on Internet access should be made permanent.

The Taxman Clicketh
Heritage Foundation President Edwin J. Feulner explains how taxes on the Internet stifle innovation and economic growth.

Model Resolution: Ban on Internet Access Taxes
Amanda Hydro of The Tax Reformer compiles reasons why a ban on Internet access taxes is vital.

Internet Tax Debate: Freedom vs. Taxation
Americans for Tax Reform explains how keeping the Internet tax-free represents “freedom” and that allowing taxes on Internet access would become onerous.

Key Vote “Yes” on the Permanent Internet Tax Freedom Act
FreedomWorks explains how consumers would be harmed, and the digital divide widened, by taxation on Internet access.

House Passes Bill to Ban Internet Taxes
Then-Rep. Christopher Cox (R-CA) explains his vote to extend the ban on Internet access taxes.

For further information on the subject, visit the Telecom Issue Suite on The Heartland Institute’s Web site at www.heartland.org.

Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, you may contact Heartland Research Fellow Jim Lakely, managing editor of InfoTech & Telecom News, at 312/377-4000 or jlakely@heartland.org.