TAXING THE INTERNET
It’s now hard to imagine life before the Internet. Virtually every company, organization, school or government agency now boasts a “www” address as part of its contact information. Children as young as three and four are surfing online, looking up pictures and playing computer games as they learn to read and write. And soldiers on the battlefront in Iraq and Afghanistan can communicate with their loved ones via video messaging and e-mail.
But the Internet has also opened a Pandora’s Box of legislative activity, creating a whole new industry subject to regulation and taxes. While sales taxes on the Internet vary from state to state, taxes on Internet access – the monthly fees you pay to Comcast, AOL or MSN – are not subject to taxation. In 1998, Congress passed the original moratorium and called for increased study of the issue, insulating Americans from new taxes and giving this burgeoning industry an environment in which it can continue to grow and flourish. Recently, Congress voted to extend the ban on taxing access to the Internet. While some local governments do levy taxes on telecommunications and right-of-way access, which help pay for important public services, this ban prohibits new taxes from being imposed. I voted for the bill, because I believe federal actions should not inhibit Americans from utilizing the vast educational, recreational and information resources of the World Wide Web.
The Internet is an important vehicle of commerce driving our economy. In 2000, $38.8 billion in business-to-consumer transactions occurred online. In 2004, estimates indicate that figure could top $180 billion. E-commerce is especially vital in a state the size of Texas, with thousands of residents living in rural areas far from the shopping malls and department stores found in the cities and suburbs. A recent study reported that 67 percent of urban and 66 percent of suburban Americans use the Internet at home or work, while 52 percent of rural residents are online. The Internet brings the latest consumer goods to your doorstep with the click of the mouse, whether you live in a high rise in downtown Houston or a ranch outside of El Paso.
Additionally, the Internet breaks down geographic barriers and enables each of us to explore new worlds we may never have known. From a rural schoolhouse in Pecos County, students can jump online and interact with school children across America. A stay at home mother in Wichita Falls can take college courses on the Internet, simultaneously raising her family while earning a master’s degree in business. By taking its business to the Web, a small home business in Freer can expand beyond its neighborhood and sell gift baskets, quilts or handcrafted jewelry to customers around the world.
The Internet Tax Nondiscrimination Act, which passed the Senate 93-3, extends the ban on Internet access for four more years. While I supported the bill, I also worked to ensure the legislation preserved the status of Texas communities already collecting “franchise fees.” Franchise fees and access line fees are payments that have been collected by cities since 1870 from telecommunications companies for use of public rights of way.
Taxing the Internet and raising the costs of electronic commerce would harm American consumers and grow the “Digital Divide” in America. While millions of Americans enjoy the Internet, there are still too many who don’t have access to this valuable tool. Raising access costs would most surely put it further out of reach for low-income Americans, senior citizens and those living on fixed incomes. Extending the ban on access taxes was the right thing to do. As we’ve made strides in recent years to close the Digital Divide and bring the Internet to all Americans, Congress must not throw up roadblocks on the Information Superhighway.
May 21, 2004