[Congressional Record Volume 153, Number 1 (Thursday, January 4, 2007)]
[Senate]
[Pages S148-S149]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID (for Mr. Wyden (for himself, Mr. McCain, and Mr. 
        Sununu)):
  S. 156. A bill to make the moratorium on Internet access taxes and 
multiple and discriminatory taxes on electronic commerce permanent; to 
the Committee on Commerce, Science, and Transportation.
  Mr. WYDEN. Mr. President, today I am reintroducing in this new 
Congress a bill to advance a cause for which I have been fighting for 
over 10 years now. The Permanent Internet Tax Freedom Act would extend 
the current Internet tax moratorium, so that the Internet can remain 
free from burdensome and discriminatory taxes.
  Legislation to keep the Internet free from these taxes has passed the 
Senate 3 times since 1998 with sunsets that required consecutive 
extensions. A permanent moratorium on Internet taxation passed through 
both the Commerce and Finance Committees in the 109th Congress yet 
failed to get action on the Senate floor.
  I come to the Floor again, bringing up Internet Taxation, because the 
moratorium on Internet Taxation is set to expire on November 1st of 
this year. In only 11 months, if Congress does not act, the moratorium 
on Internet Taxation that has allowed the Internet and e-commerce to 
flourish will cease to protect American consumers and American 
businesses.
  I don't want those who use the Internet to end up like our ancestors: 
they were told the Spanish-American War telephone tax was 
``temporary,'' and that the tax was just needed to pay for the war. 
That war ended two centuries ago, and Congress is just now getting 
around to getting rid of the tax!
  The last time I checked, the Internet shows no sign of riding off 
into the sunset, or becoming obsolete. You can bet that once 
discriminatory taxes are slapped on Internet users, those 
discriminatory taxes won't be going away any time soon either.
  If you want to figure out how much discriminatory taxes could be, 
just look at your phone bill. Taxes and government fees already add as 
much as 20 percent in surcharges to consumer's telephone bills.
  If you take a gallon of milk to the checkout counter and pay tax on 
the purchase, the clerk can't turn around and charge you another tax if 
you're going to use the milk in your cereal and another tax if you're 
going to put milk in your coffee. But that's what will happen to the 
Internet if the ban is not made permanent. You'd still pay all the 
telephone taxes and all the franchise fees on cable, but on top of 
those you'd pay even more taxes for the same service when you sign on 
to the Internet!
  Discriminatory and double taxation of the Internet has been banned 
for 8 years now. In all that time no one has ever come forward with 
evidence to show that the failure to impose discriminatory taxes has 
hurt them. No one has demonstrated why taxes that cannot be imposed in 
the offline world should be imposed on identical online transactions.
  Western Civilization may not end if the Permanent Internet Freedom 
Act is not passed, but you have to ask how many times Congress has to 
revisit, re-litigate and re-approve a law that has been this effective. 
It is time to make the Internet Tax moratorium permanent.
  I want to thank my colleagues, Mr. McCain from Arizona and Mr. Sununu 
from New Hampshire for introducing this legislation with me today. They 
both fought tirelessly alongside me and our former colleague, Mr. Allen 
from Virginia, to get the moratorium extended in 2004. I am pleased 
that they are now replacing Mr. Allen as my bi-partisan partners on 
this important piece of legislation. It is my hope that the three of 
us, working with the rest of our colleagues, can get this all-important 
piece of legislation passed early this year so we do not have to worry 
about it as the November 1st deadline fast approaches.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 156

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Permanent Internet Tax 
     Freedom Act of 2007''.

     SEC. 2. PERMANENT MORATORIUM ON INTERNET ACCESS TAXES AND 
                   MULTIPLE AND DISCRIMINATORY TAXES ON ELECTRONIC 
                   COMMERCE.

       Section 1101(a) of the Internet Tax Freedom Act (47 U.S.C. 
     151 note) is amended by striking ``taxes during the period 
     beginning November 1, 2003, and ending November 1, 2007:'' 
     and inserting ``taxes:''

  Mr. McCAIN. Mr. President, I am pleased to join with Senators Wyden 
and Sununu in introducing the Permanent Internet Tax Freedom Act of 
2007. This bill would ensure that consumers never have to pay a toll 
when they access the Information Highway. Whether consumers log onto 
the Internet using cable modem, DSL, dial-up or wireless services, 
under this bill, they will not be taxed by any State or local 
governments for their Internet usage.
  Keeping Internet access affordable to all Americans is a worthy 
policy goal. The Internet has become a fixture and core component of 
modem American life that has created and continues to generate social 
and economic opportunities throughout the United States.
  In 1998, Congress put in place a temporary ban on any State or local 
taxes on Internet access. Additionally, Congress placed a moratorium on 
multiple or discriminatory State and local taxes on e-commerce 
transactions to ensure the growth of online commerce. This moratorium 
was extended in 2004, but is set to expire November 1, 2007. Our 
legislation, the Permanent Internet Tax Freedom Act of 2007, would make 
the moratorium permanent.
  Today, the U.S. ranks 12th in the world in per capita Internet 
access, lagging behind competitors South Korea, the United Kingdom and 
Canada. This is absolutely unacceptable for a country that leads the 
world in technical innovation, economic development, and international 
competitiveness. We certainly cannot afford to make Internet access 
more difficult to obtain if we want to become more internationally 
competitive.
  There is little doubt that the development and growth of the Internet 
was aided by the tax moratorium. In 1998, the year the moratorium was 
first enacted, 36 percent of U.S. adults reported using the Internet. 
In 2006, that number grew to 73 percent, an all time high according to 
an April 2006 Pew Internet & American Life Project Report. However, the 
report also found that Americans in the lowest income households are 
considerably less likely to be online. Just 55 percent of adults living 
in households with less than $30,000 annual income go online, versus 73 
percent of those whose income is between $30,000-$50,000. This 
``digital divide'' needs to be closed immediately. Continuing 
Congress's policy of reducing the cost of Internet access, by 
preventing the service from being taxed, is one step we can take now to 
close the ``digital divide.''
  As use of the Internet has grown, so has e-commerce. According to the 
most recent comScore Networks report, Americans spent over $100 billion 
on Internet purchases during 2006, a major milestone for retailers and 
the World Wide Web. This legislation would ensure that online 
transactions are not taxed by cities or States at a rate higher than 
other sales transactions. Again, the goal of this legislation is to 
make the Internet affordable to all

[[Page S149]]

Americans and foster the growth of the Internet.
  With respect to the question of whether it is wise to make Internet 
access tax free, Congress has a long history of giving tax incentives 
to commercial activities that we believe help our society. The Internet 
is a technology that is a source of and vehicle for significant 
economic benefits. The proponents of this legislation strongly believe 
the Internet clearly merits the tax incentives provided by this bill.
  I recognize that there are some who wish to continue to make the 
Internet tax moratorium temporary. Their premise is that the Internet 
will continue to evolve and thus Internet access may develop into a 
service the States and localities would wish to tax. I believe that 
this moratorium should be permanent to continue encouraging those very 
Internet-related innovations. By making the moratorium permanent, 
businesses that invest in and provide Internet access will be able to 
operate in a predictable tax environment. This will result in continued 
investment in this very important social, political and economic 
medium.
  Congress now has the opportunity to extend permanently the Internet 
tax moratorium and assure consumers that taxes will not inhibit the 
offering of affordable Internet access. By supporting this legislation, 
we can continue to promote Internet usage by Americans as well as 
encourage innovation relating to this technology. For these reasons, I 
ask my colleagues to support this pro-consumer, pro-innovation, and 
pro-technology bill.
                                 ______