A long era of uncertainty over the future of Internet taxes may be coming to a close. With a 75-20 vote in the Senate today, Congress passed the Permanent Internet Tax Freedom Act (PITFA), which bans taxing Internet access.
Summed up by Congress, the act “amends the Internet Tax Freedom Act to make permanent the ban on state and local taxation of Internet access and on multiple or discriminatory taxes on electronic commerce.”
While billed as a pro-consumer measure, the measure was supported most fervently by the cable and telecommunications industries.
"We applaud the Senate on today’s passage of the Permanent Internet Tax Freedom Act (ITFA)," said Michael Powell, president of the National Cable & Telecommunications Association, the cable industry's trade association. "Internet access is more than a convenience, it’s critical to the daily lives of Americans."
"By keeping Internet access free from state and local taxes, ITFA will permanently keep down the cost of connectivity, enable more American consumers and businesses to get online and allow the Internet to further power economic growth. We urge President Obama to sign this important legislation to make ITFA permanent once and for all,” said Powell.
Permanent tax ban
PIFTA makes permanent the Internet Tax Freedom Act (ITFA), which was first passed in 1998. It placed a temporary ban, or moratorium, on taxing Internet access.
The key word here is “temporary.” ITFA was never made permanent, even though it received bipartisan support. Some senators consistently prevented the tax ban from being made permanent. Sen. Dick Durbin (D-Ill.), for one, wanted to make passage of PITFA contingent on passage of another piece of legislation called the Marketplace Fairness Act (MFA), which stipulates that consumers must pay sales tax on online purchases.
After being promised a vote on a new MFA in 2017, Durbin finally relented and agreed to the bill’s passing, ending 17 years of annual ITFA extensions.
The bill now awaits the signature of President Barack Obama. Whether he intends to sign it is unknown. If he does, states who have taxes in place for Internet access will need to cease collections by 2020.