[Congressional Record Volume 150, Number 134 (Friday, November 19, 2004)]
[Senate]
[Pages S11627-S11628]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     INTERNET ACCESS TAX MORATORIUM

  Mr. ENZI. Mr. President, the Internet plays a critical role in 
today's global economy. It allows us to work harder, faster, and more 
efficiently. With the click of a mouse, we can seal business deals, 
send birthday cards, and buy cars. We have come to rely on its ability 
to connect us with people and places around the world. Today Congress 
cleared an important piece of legislation that will help keep the 
internet affordable and accessible for all Americans.
  Today's passage in the House of S. Con. Res. 146, which amends S. 
150, signals the end of months of long and difficult negotiations. I 
would like to commend my colleagues, Senators Allen, Wyden, Alexander, 
Carper, Voinovich and McCain for their commitment to this issue. Their 
hard work has allowed us to pass a fair and reasonable moratorium on 
internet access taxes. The moratorium will protect all Internet users, 
regardless of connection platform, while ensuring that states and 
localities do not lose billions in tax revenue.
  The moratorium on internet access taxes is necessary now because 
broadband technology is still in its infancy in many parts of the 
country. In Wyoming, we have a number of small towns where Internet 
service is limited to 14.4 Kbps dial-up service. At that speed, it 
takes all day to download one song--a song that was legally obtained, 
of course. The only way we are going to improve the availability of 
broadband services in places like rural Wyoming is by eliminating 
unnecessary and burdensome taxation and regulation. Consumers in every 
part of the country want and deserve internet access. The internet 
access tax moratorium will make sure they can afford to subscribe to 
whatever service is available. I am confident that as more consumers 
spend their hard-earned money on Internet services, the cable 
companies, telephone carriers, satellite providers and other Internet 
service providers, ISPs, will invest more of their money in deploying 
high-speed broadband services.
  Renewing the Internet tax moratorium is important for consumers, but 
it is also a major issue for states and local communities that rely on 
certain tax revenue from telecommunications.

[[Page S11628]]

These state and local governments have made the decision to tax certain 
services and, as a former mayor and State legislator, I respect their 
ability to do so. However, I agree with my colleagues that Internet 
access is a special service that should be tax free. The difficult part 
is trying to define what ``Internet access'' actually is. We have spent 
months listening to telecommunications providers, consumers, and local 
officials define what telecommunications services are and when and 
where telecommunications taxes should start and stop. Not surprisingly, 
the groups have disagreed more often than not. Despite the struggle, I 
believe we came up with a reasonable compromise on the definition and 
the grandfather clauses, which will give our state and local 
governments the time they need to phase out taxes imposed prior to the 
moratorium.
  Now that we have passed the moratorium on Internet access taxes, I am 
anxious to refocus some of our energy on a bill I introduced in both 
the 107th and 108th Congresses. The Streamlined Sales and Use Tax Act 
would simplify the extremely cumbersome network of State sales and use 
taxes and help States begin to recover from years of budgetary 
shortfalls. The bill would authorize States that have signed the 
Streamlined Sales and Use Tax Agreement and have passed legislation 
simplifying their tax system to require all sellers to collect and 
remit sales taxes.
  My streamlined bill, which has 20 cosponsors this year, is a critical 
bill that many of my colleagues are learning more about and recognizing 
its growing importance as Internet usage explodes. Two years ago the 
revenue loss attributed to the Internet sales tax loophole was fairly 
minimal. Today, the revenue loss has ballooned as online and other 
remote sales have increased. The States have responded to this budget 
crisis by signing the Streamlined Sales and Use Tax Agreement and 
implementing legislation that drastically simplifies their sales and 
use tax systems. In fact, 21 States have already signed into law the 
necessary implementing legislation, while 8 others are currently in the 
process of doing so.
  As the States continue to make progress on reforming their sales tax 
systems, I would urge Congress to make progress on a bill that will 
provide to the states the authority they need to collect their own 
taxes. I intend to introduce the Streamlined Sales and Use Tax Act 
again next year and hope to work with the Finance Committee Chair and 
other members of the Senate to pass it into law.
  In the meantime, I am pleased we will have in place a moratorium that 
recognizes the importance of the Internet and will allow it to grow and 
prosper in the coming years.
  (At the request of Mr. Daschle, the following statement was ordered 
to be printed in the Record.)

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