Congress can avoid the coming 'Taxmageddon' threat

By: Peter Davidson

Earlier today, the "Permanent Internet Tax Freedom Act of 2015" (H.R. 235) was passed with overwhelming bipartisan support by the U.S. House of Representatives. The measure, sponsored by Representatives Bob Goodlatte (R-VA) and Anna Eshoo (D-CA), along with over 200 members of the House, protects consumers from being hit with tax increases on their Internet access services from states and local governments. Just as important, it does so permanently.

Consumers get walloped enough already with taxes on their voice and mobile services. Currently, most people pay a combined monthly rate of over 17% in federal, state and local taxes on phone and other traditional communications services. Extending these same taxes to an $80 monthly wireless data plan would add an additional $14 a month to a consumer’s bill. Nobody wants to see these same onerous taxes extended to Internet access, especially if we care about increasing broadband adoption and helping people use the Internet more, not less. House passage of H.R. 235 helps ensure that we can hold the line on state and local governments reaching even further into consumers’ pockets to tax Internet access on a wireline or mobile connection.

The threat of local governments doing just that has been lingering for months. Bipartisan members on both sides of Capitol Hill have worked to pass a permanent tax ban, but those efforts have been stalled when the bill has been tied to other unrelated bills. With the ban on Internet taxation expiring at the end of September, it’s crucial that Congress act on a permanent ban on Internet access taxes now.

Today, Internet tax freedom is more important than ever, given the FCC’s recent actions to reclassify broadband service as a Title II telecommunications service. This reclassification makes it easier for state and local governments to extend the current phone taxes already on the books over to broadband connections, too. It will be “Taxmaggedon” for consumers’ Internet bills if ITFA is allowed to expire this September. 

ITFA is a bipartisan concern, and House leaders on both sides of the aisle have long recognized how important passage of this legislation is. It’s time for the Senate to follow the House’s lead and move quickly to pass a permanent extension of ITFA, and take this tax uncertainty off of the table for consumers once and for all.

Peter Davidson is responsible for federal legislative affairs and global public policy at Verizon. Before joining the company, Davidson served as general counsel assisting the United States Trade Representative in negotiating and implementing trade agreements and supervising litigation at the World Trade Organization. Prior to becoming general counsel to the USTR in February 2001, Davidson was vice president for Congressional Affairs at Qwest, coordinating all federal legislative activities for that company.