The
World Wide (Tax) Web
By Senator
George Allen
The growth of
the Internet over the past 10 years has provided greater opportunity
for everyone from the largest multinational corporation to
the smallest mom-and-pop start-up business. By giving more people
access to knowledge and information, the personal computer and the
Internet have empowered tens of millions of Americans as consumers
and entrepreneurs, and as citizens in our free society.
The content
on the Internet and access to it have exploded primarily because
government regulators and taxers have stayed out of the way. While
governments are, by nature, drawn to take "their share" of any successful
private venture, for the Internet to keep growing and for our citizens
to keep benefiting from it, government must fight its instinct to
meddle and to burden creativity. That's why Congress passed a law
in 1998 temporarily banning taxes on Internet access.
In November
of 2003, the temporary moratorium on Internet-access taxes expired,
and this week the Senate will face this issue once again. Once again,
the answer is clear. We must keep access to the Internet tax-free.
Some have asked,
"Why is it important for us to act now?" For an answer, one need
only look back over the last six years, when Internet access was
supposedly tax-free. Even while the moratorium was in place, some
states desperately chose to solve their budget problems by skirting
the law and taxing elements of the Internet. They took a general
definition of Internet access and found parts they claimed were
not covered.
With this tactic,
if we had agreed not to tax hamburgers, those states would have
come up with a cynical plan to tax the meat, but not the bun. We
must make sure that the avaricious tax commissars from every county,
city and state in America do not continue conniving new ways to
tax the Internet and the people who use it. Otherwise, the Tax-the-Internet
advocates will turn our freeways into toll roads like the New Jersey
Turnpike.
Last year, I
joined with Sen. Ron Wyden of Oregon in calling for a permanent
ban on Internet-access taxes, as well as on discriminatory and multiple
taxes on the Internet. While I continue to believe that we should
enact a permanent ban, it is clear after months of debate that we
must reach a short-term compromise if we are to protect the American
consumer.
The stalemate
that has arisen can now be ended with the passage of Sen. John McCain's
amendment to our bill. His amendment, which calls for a four-year
moratorium, maintains the balance struck by the original Internet
tax moratorium. It makes Internet access tax-free, and will continue
to encourage the growth of the Internet by protecting consumers
in a technology neutral fashion. But it will still respect and maintain
state and local governments' existing revenue base, protecting traditional
taxes on telephone services.
The proposal
brings simplicity and clarity to a prolonged debate. While it takes
into account the advances in technology since the original moratorium
passed in 1998, it also provides Congress, industry, and state and
local governments with the ability to revisit the issue and make
adjustments where necessary to accommodate for new technologies
and changing market realities.
It provides
states and localities that have been imposing access taxes for the
past six years, and taxing high-speed DSL service for the past two
years, with a three-year window to cease such harmful practices.
This is enough time for them to get out of their current budget
cycle and adequately prepare and plan.
A key aspect
of any legislation that comes from our debate on Internet taxation
must also ban taxes on broadband high-speed Internet access. We
should want to help broadband high-speed Internet grow and, more
importantly, want to help more people have access to the wealth
of educational, informational and entrepreneurial opportunities
offered by broadband. A study by the Pew Internet and American Life
Project released just last week found geographic disparities in
high-speed access. Only 10% of rural Americans have broadband at
home, compared to 28% of urban or suburban residents.
The impact of
taxing broadband would be particularly harmful to small towns and
rural communities. Digital subscriber lines DSL and
advances in wireless delivery systems offer an efficient way of
extending high-speed Internet access to less-populated areas. But
if these services are taxed, fewer families and businesses will
be able to afford the service and that, in turn, will make the investment
in delivery technology less attractive to broadband providers.
The deployment
of broadband is an essential component for small business's ability
to compete, especially in rural areas. As these businesses grow,
they will offer more prosperity and opportunities for young people
to obtain jobs in their home communities rather than having to move
away to find work. New taxation would cost millions of Americans
everywhere jobs and opportunities. It would make our monthly Internet-service
bill look like our telephone bills, with multitudes of state and
local taxes.
With history
as our guide, I predict that if we protect the Internet and the
American consumer from stifling taxes now, we will see more economic
growth in the future. Those same bureaucrats who are hungry for
short-term tax revenue today will reap an even greater benefit from
increased economic and consumer activity tomorrow. It is up to us
to show discipline and restraint and allow the Internet to flourish
unimpeded in the decades to come.
U.S. Senator George Allen (R-VA) is the author of the Internet Tax
Nondiscrimination Act. This article originally appeared in the April
28 edition of the Wall Street Journal.
[Posted
April 29, 2004]
|