House committee passes Internet tax moratorium

The House Judiciary Committee passed a bill Wednesday that would place a permanent moratorium on Internet access taxes and other discriminatory taxes on electronic commerce.

The committee’s 30-4 vote in favor of the Permanent Internet Tax Freedom Act sends the bill to the full house for consideration.

The bill builds upon the Internet Tax Freedom Act signed into law by President Bill Clinton in 1998 and set to expire Nov. 1. While PITFA would eliminate certain discriminatory taxes it would not prohibit online retailers from charging sales tax on purchases made online.


“The Internet is a meritocracy. It does not care how you look or where you come from,” Judiciary Committee Chairman Rep. Bob Goodlatte, R-Va., said. “It offers opportunity to anyone willing to invest time and effort. It is the greatest gateway to knowledge and engine for self-improvement that has ever existed.”

Goodlatte said Internet innovation should not be stymied by a tax. PITFA would “ensure that Americans can access the scientific, educational and economic opportunities the Internet offers, tax free, in order to better their lives, improve society and grow the economy,” he said.

If the Internet Tax Freedom Act were to expire, state and local governments would have the authority to impose a tax on households that access the Internet. A 2013 report from the U.S. Census Bureau said in 2011, more than 71 percent of Americans reported accessing the Internet from home — an increase of almost 60 percent from the late 1990s when ITFA first passed.

Under the first law, seven states had an exemption due to Internet taxes already in place before the bill passed in 1998. However, if the current version of PITFA, which has more than 200 co-sponsors, were to pass, those would be repealed.

Jerrold Nadler, D-N.Y., is one of four lawmakers who oppose the bill, calling it a violation of states’ rights.


“Do we tell states you cannot levy taxes on electricity generation or transmission?” Nadler said. ”Those are state decisions. I thought members of this body, especially those on the other side of the aisle, supported states’ rights.”

But most, including the Internet Tax Freedom Act Coalition, were pleased with the bill passing committee.

“Today’s markup was the first step of many to ensure consumers, students, and small businesses are not burdened with new taxes on Internet access that could be as high as double the national sales tax rate,” the group said in a statement. “We applaud their efforts and hope the Senate will follow suit in moving a companion bill prior to the August recess.”

The Senate version of the bill, the Internet Tax Freedom Forever Act, was referred to committee after it was introduced in August 2013 by Sens. John Thune, R-S.D., and Ron Wyden, D-Ore. That bill, though, has not yet been taken up in committee.

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