Tax-free Internet Access Might End November 1

Published October 5, 2007

(CHICAGO – October 5, 2007) If the 1998 Internet Tax Freedom Act (ITFA) is not extended, consumers may pay taxes to access the Internet this fall. Congress will either need to extend or make permanent the federal ban that expires on November 1 to keep Internet access tax-free.

There is bipartisan support for several bills to keep Internet access tax-free. However, state and local municipalities have been lobbying in favor of new cellular telephone access taxes and against the permanent moratorium on Internet access service taxes.

“For about the price of an ordinary television set, even the poorest families and the smallest businesses can buy a computer and enjoy the same access to the Internet as the richest families and largest businesses,” said Steve Stanek, research fellow with The Heartland Institute. “However, if Congress allows the moratorium on Internet access taxes to expire in November, new taxes and the resulting higher costs will cause those who already are struggling to struggle harder or give up their Internet access entirely.”

Taxing Internet access is highly regressive because the “digital divide” is considered key to promoting entrepreneurial development and small business growth in poor communities.