Internet Tax Freedom

Floor Speech

Mr. THUNE. Mr. President, I rise today to speak about the Internet Tax Freedom Forever Act, legislation I introduced on a bipartisan basis with my colleague Senator Ron Wyden to make the expiring Internet tax moratorium permanent. Because of the moratorium Americans have not been taxed on Internet access for 16 years, but this is going to change and new taxes will be levied starting in November if Congress doesn't act soon.

I am proud to work with Senator Wyden on this bill, the lead Senate sponsor of the original Internet Tax Freedom Act that passed in 1998. This landmark law known as ITFA imposed a Federal moratorium that stopped State and local governments from placing taxes on Internet access. This moratorium has been extended three times, and it has been critical to the rapid growth of the Internet.

As we all know, the Internet provides unprecedented economic and social benefits. Mom and pop businesses in places such as South Dakota, Oregon, and across America found access to consumers and new business opportunities that are only possible through the Internet. Job seekers and entrepreneurs are finding opportunities that were once difficult to discover. Educators are exploring innovative tools and techniques that are powered by the Internet to equip students with the skills they will need for the 21st Century, and health care professionals are remotely providing services that are saving lives in rural areas. The idea behind the moratorium is straightforward. By not taxing Internet access we encourage broadband adoption and investment, which spurs all of the exciting activities that I just mentioned.

The Internet is a gateway to tremendous societal benefits. It is, frankly, astounding when you consider that it wasn't very long ago that the Internet was considered a novelty and only for the tech savvy. Today it is a must-have resource, the existence of which we almost take for granted. We cannot take for granted, however, that the moratorium on Internet access taxes has contributed to the Internet being accessed by hundreds of millions of Americans every single day. Thanks to the 16-year ban, consumer access to the Internet is free from State and local taxation for nearly all Americans. This gives consumers a welcome break on their monthly bills.

In the commerce committee we talk a lot about finding ways to encourage greater broadband deployment across all of America, and as cochair of the Congressional Internet Caucus, I worked with colleagues on both sides of the aisle to find ways to promote the Internet as an engine of economic growth and economic freedom. One of the ways that we can do that is by making broadband more affordable.

State taxation of Internet service will make broadband more expensive, which is at cross-purposes with our goal of encouraging Internet access and deployment. This doesn't make a lot of sense. The moratorium also benefits consumers by prohibiting multiple and discriminatory taxes on goods and services sold over the Internet. This means consumers won't be taxed by multiple States on the same sale and States won't tax Internet sales more than mail order or telephone sales.

Unfortunately, the Internet tax moratorium is set to expire on November 1. Because of this, many Internet service providers are planning to send out notices to their customers informing them that they may have to start paying taxes on Internet access if Congress fails to act. I expect that many millions of Americans who use the Internet will not be happy when they realize that their phone or Internet bill is going to suddenly increase. Two things are for sure: Expiration of ITFA will not encourage more Americans to get online to do commerce, civic engagement, or social media; and countless Americans will be calling Congress demanding that we keep taxes off of Internet access.

Rather than wait for angry constituents, let us be proactive and pass the Internet Tax Freedom Forever Act without delay. My bill with Finance Committee Chairman Wyden provides for a permanent extension of the moratorium. By passing a permanent extension we will provide certainty to Internet consumers in every State. Making the moratorium permanent also means that Congress won't have to waste time and energy passing yet another extension, year after year, into the future. There are plenty of other areas for Congress to focus on.

Our bill also eliminates the grandfather clause that currently allows 6 States to tax Internet access. Eliminating the moratorium's grandfather provision will provide consumers and businesses with a tax break. This includes consumers and businesses in my State of South Dakota, where our legislation will make Internet access less expensive, thus helping to encourage broadband deployment.

The Internet Tax Freedom Forever Act currently has 46 cosponsors, nearly half of the Senate. The bipartisan cosponsors of the legislation understand the tremendous benefits provided by ensuring Internet access is not taxed and the discriminatory taxes are not applied to the Internet. I strongly encourage my colleagues in the Senate to join Senator Wyden and me and the 46 other cosponsors in this fight. When the Senate reconvenes after the Memorial Day recess, we should move quickly to extend the tax moratorium and to ensure that Americans don't wake up on November 2 with new, unexpected taxes.

In the coming weeks and months, I plan to continue raising the need to pass our bipartisan legislation.

I yield the floor.

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