Wednesday, September 5, 2007
As Internet use continues to spread in the U.S., the government should pursue policies that help promote investment in, and greater consumer access to, faster and more robust broadband services. The current Internet tax moratorium is one policy that Congress has enacted to help make the internet a universally accessible, free, and open platform capable of delivering a rich variety of services to consumers.
With that moratorium due to expire this November, Google recently joined Don't Tax Our Web, a coalition of companies and associations dedicated to extending the current moratorium and reducing barriers to the Internet's continued growth.
The current moratorium prohibits three things: state and local taxation of Internet access, multiple taxes on a single e-commerce transaction, and taxes that discriminate against online transactions. We support a permanent extension of the moratorium because multiple or discriminatory taxes on internet transactions could damage internet-based commerce, a critical and growing component of our economy.
What are these "multiple or discriminatory" taxes, exactly? Imagine a web user who purchases a music file (maybe "One Week" by the Barenaked Ladies, which was released in 1998, the year the original moratorium was signed into law by President Clinton). Under current law, the transaction couldn't be taxed at a higher rate than if the sale had occurred in a physical store or through any means other than the Internet. In addition, the moratorium prohibits more than one state, or more than locality, from taxing the transaction. Protecting internet-based transactions like this from multiple and discriminatory taxes makes a lot of sense to us.
Keeping Internet access tax-free is also another way that government can help further the growth of the web to all corners of the U.S. At a time when American policymakers are working to increase broadband penetration rates and improve the quality of broadband services to consumers, we believe that increasing barriers to access -- whether they are created by the government or by the private sector -- will only frustrate our common goal of greater access to better broadband for all consumers.
We look forward to working with the members of Congress championing this issue and with the Don't Tax Our Web coalition to extend the internet tax moratorium.