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Senate Should Protect Internet Tax Freedom

Robert M. McDowell

Congress faces a mounting list of important items it must tackle beginning in September, from a possible treaty with Iran to grappling with the nation’s borrowing limit. The fall promises to pack a punch, even as the nation’s attention starts to turn toward the 2016 elections. Although many pressing issues absolutely have to be addressed, Members of Congress should take the layups available to them.

For instance, Republican Rep. Bob Goodlatte of Virginia, along with nearly 200 co-sponsors from both parties, led an effort in June to help unanimously pass a bill known as the Permanent Internet Tax Freedom Act. The measure is actually just the latest iteration of a bill originally passed in 1998 and extended five times since, including just last December as part of a large appropriations bill. It rather straightforwardly bans state and local governments from taxing Internet access, or imposing “email taxes.” The bill now stands to expire in October if the Senate does not adopt the House measure or pass its own version, the Internet Tax Freedom Forever Act.

This no-brainer of a bill’s progress could be held up by a totally unrelated piece of legislation known as the Marketplace Fairness Act (MFA), sponsored by both Virginia Sens. Tim Kaine and Mark Warner. This politically-polarizing measure claims to level the playing field between brick-and-mortar stores and online retailers by allowing state governments to collect sales taxes from online retailers not physically located in their state.

MFA deserves its own debate, but it should not be used as a bargaining chip to delay the passage of the Permanent Internet Tax Freedom Act. The benefits of a tax-free Internet are too powerful, and Internet access taxes must not be conflated with sales taxes.

Virginia is home to 64 broadband service providers. Nearly 95 percent of Virginians have access to broadband services, and roughly three out of four regularly use the Internet from mobile devices. As with many things, Virginia outpaces the national average as well as our neighbors to the south and west — North Carolina and Tennessee — in this regard.
Moreover, Virginia maintains the fourth-largest tech sector in America, employing more than 280,000 people with jobs that average $102,000 a year. In fact, Internet-fueled technology companies employ almost 10 percent of private sector workers in the commonwealth, the highest percentage in the nation.

Yet we Virginians must do more. The commonwealth is only the 31st most-connected state in the country. While penetration is at 100 percent in urban areas like Northern Virginia, Richmond and Hampton Roads, many rural portions of the state still lack access to high-speed services.

Adding taxes and fees to the Web — a real possibility should the Senate make the mistake of melding the sales and Internet access tax issues while allowing the ban on access taxes to expire — will only turn back the clock on Virginia’s Internet economy.

Sen. Warner, himself a pioneer in the Internet industry, is consistently viewed as one of the upper chamber’s more tech-savvy members. Same with Sen. Kaine. The Old Dominion’s duo should do their part to advance this legislation and keep taxes off Internet access. The future of Virginia’s Internet economy is too important to allow politics to trump common sense.

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