My Turn: Internet tax would be costly for consumers

Posted: Thursday, November 13, 2003

Within a matter of weeks, everyone who uses the Internet in Alaska is likely to face millions of dollars in new, multiple and discriminatory taxes on Internet access and services.

Alaska's own Sen. Ted Stevens is one of nine members of the Senate who are pushing the new taxes by blocking passage of the Internet Tax Nondiscrimination Tax, a bipartisan bill widely supported in the Senate. His efforts are supported by Governor Murkowski, who is lobbying for the new taxes through the National Governors Association.

If they are successful, the cost of Internet service will skyrocket as Internet access providers are forced to collect and remit taxes to authorities in every city, county and state in which they do business or through which Internet traffic moves. Taxes that will necessarily be passed along to consumers. Other Internet services - e-mail, instant messaging, downloads, Web hosting and more - will also be subject to new taxes. The cost of compliance will put most small Internet providers in Alaska out of business, add new costs for every Internet user and cripple efforts to deploy broadband throughout the state.

A bill to renew the five-year-old ban on such taxes and make it permanent has already passed the House of Representatives by unanimous voice vote, and has been approved by the Senate Commerce Committee. The legislation, which will spur the economic recovery and keep Internet access affordable for families and businesses, is supported by every major civic group, consumer group and business group in the nation. President Bush is waiting to sign it into law.

The legislation would pass in the Senate as well, if it could be brought to the floor for a vote. But Senator Stevens is lobbying to keep that from happening. Instead, Senator Stevens is pushing a "compromise" that would protect only a tiny fraction of the cost of Internet access from taxation and only for two years - while heaping new taxes on everything else.

According to these tax-happy public servants, billions of dollars in new, punitive taxes are necessary to help the state out of it current financial woes and to promote fairness in taxation of essential services. But the amount collected in the next few years won't even make a small dent in the state's economy. It will make a major dent in the budgets of schools, libraries, businesses and homes, which will see the cost of Internet access nearly double. And there is nothing fair about that.

Most states already recognize that leaving the Internet free of taxes will create more jobs, generate more revenues and ultimately bring more tax dollars into the state coffers than simply slapping on a hatful of new taxes. But that message still needs to be delivered to Senator Stevens and Governor Murkowski.

• David P. McClure is president of the U.S. Internet Industry Association, a national trade association for Internet commerce, content and connectivity.

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