Congress Passes Permanent Internet Access Tax Ban... But May Enable More e-Commerce Sales Tax
from the the-taxes-shall-continue dept
In 1998, Congress passed the Internet Tax Freedom Act (ITFA), which placed a ban on taxing internet access. The bill was temporary, and every few years had to be extended by Congress to stop attempts to add taxes to the cost of your internet access. For a long time, there's been a push to make the ITFA permanent, and Congress finally did that yesterday, when the Senate approved such a bill (the House approved its version last summer). As Senator Ron Wyden noted in response to this passing, this inevitably saves the public a lot of money on a vital service. He notes that mobile phone service is taxable, and average consumers pay a 17% tax on such service. The President still needs to sign the bill, but it would be a surprise if he vetoed it.The reason it took the Senate so long to actually vote on this was because a bunch of brick-and-mortar retailers have been trying to sabotage it, by tying the approval of the permanent ban on access taxes to a totally unrelated bill that would force e-commerce providers to charge a sales tax. This is a fight that's been going on for years. Historically, mail order and e-commerce shops didn't have to pay sales tax unless they had a physical presence in a state. This made sense, as the taxes were supposed to be to support local services that those companies relied on. However, brick-and-mortar retailers have been claiming that this is some sort of evil "loophole" because it creates an excuse for why people like shopping online rather than in their stores. So they've been demanding that increasingly onerous tax regimes be placed on online retailers, and insisted that such a bill must be approved in conjunction with the permanent ITFA.
However, in the end, that strategy appears to have failed -- at least for now. The retailers could only get an agreement that Congress will take up the retail sales tax issue later this year, rather than tying the two directly together. Still, it will be worth watching what happens on that issue in the coming months. Expect a full court press of misleading stories about a horrible "loophole" in the coming months, as these stores look to increase the taxes on things you buy online.
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Filed Under: e-commerce, internet, internet access, internet tax freedom act, itfa, sales tax, taxes
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But it's no more a loophole than it is in the physical world. If you go buy a book from a shop in Oregon, the shop doesn't ask if you're from Washington so they can charge you Washington's tax.
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It can be for expensive items. If you're spending 20 bucks probably not, but on a few hundred or a few thousand dollars, sales tax starts to look more significant.
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What I wish they would tackle is the ridiculous equipment rental fees that get charged to everyone, and do nothing but line the providers pocket after about 6-12 months when the actual cost of the equipment has been covered.
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Sales Tax is a horrible was to tax the population
What to help the the brick & mortar? Eliminate sales taxes entirely.
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However, since the United States are generally about as united as a herd of cats, it's unlikely they would ever all agree to head in a single direction. The results are much more likely to be a whole lot more messy and confusing for consumers and retailers alike.
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Oh, god, I hope not. Thankfully, I live in a state that has no sales tax. I would be extremely angry if the feds imposed one and ruined my little utopia.
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The rules are the same for all
Makes me want to never walk into a business if they're lobbying to force sales tax on me for online purchases.
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