US Internet Tax Ban Could Expire This Year

The US House of Representatives has passed a law permanently banning the collection of local and state taxes on internet services. The Permanent Internet Tax Freedom Act still has to pass the Senate before it can be received by President Obama and signed into law. While pre-empting states and local government from creating an Internet Tax, the current situation of regular goods and services taxes being applied to internet access remains. PITFA works by indefinitely extending the lifetime of the Internet Tax Freedom Act which expires in October.

As the result of the FCC enforcing net neutrality via the reclassification of the internet as a communications service, cash-strapped local and state governments may be tempted to levy communications taxes on internet service. According to the bill’s sponsors, communications taxes are among the highest with an average of 13.5%, nearly double normal goods and services taxes. As internet service becomes more and more necessary in daily life, charging an extra tax on it seems more and more unnecessary.

Congress had taken at stab at extending an act like PITFA last term, but opposition in the Senate killed the bill. The bill now faces an uncertain future in the Senate which may force another compromise short-term extension. Few countries currently have a special internet tax with Hungary failing to implement an internet tax after heavy protests last year.

Image Courtesy of ptmoney.com