[Congressional Record Volume 156, Number 100 (Wednesday, June 30, 2010)]
[Extensions of Remarks]
[Pages E1255-E1256]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   SUPPORT OF THE DIGITAL GOODS AND SERVICES TAX FAIRNESS ACT OF 2010

                                 ______
                                 

                           HON. RICK BOUCHER

                              of virginia

                    in the house of representatives

                        Wednesday, June 30, 2010

  Mr. BOUCHER. Madam Speaker, I rise today to introduce the Digital 
Goods and Services Tax Fairness Act. I am pleased to be joined by my 
colleague from Texas Lamar Smith, the Ranking Member of the Judiciary 
Committee, as the lead Republican cosponsor of the legislation.
  Presently, consumers and businesses engaged in digital commerce may 
be subject to multiple, confusing and burdensome taxation because of 
inconsistent rules across the thousands of state and local 
jurisdictions. Disparate treatment of digital goods and services across 
these jurisdictions creates further confusion for consumers and 
businesses.
  Digital commerce extends far beyond the digital music, movies and 
games downloaded by consumers to the electronic delivery of 
professional services, educational services and health care services.
  The existing sales and use tax laws are inadequate and ill-equipped 
to address today's digital economy. The borderless marketplace and 
complex nature of digital transactions create new problems that must be 
addressed uniformly and on a national level to avoid double taxation 
and to ensure the fair and equitable treatment of digital goods and 
services.
  Unfair, multiple and inconsistent taxation of these digital goods and 
services will increase costs for U.S. businesses and make them less 
competitive in the global economy. The additional costs will also 
hinder investment by high-tech businesses in the broadband networks 
used to provide new and innovative digital goods and services.
  Unfair taxes on digital goods and services also discourage lower-
income consumers from using innovative digital services and 
technologies.
  The first state tax on digital goods was imposed in 2007. One year 
later, eleven additional states considered legislation to impose new 
taxes on digital goods, and in 2009 fourteen states considered 
legislation addressing the taxation of digital goods and services. 
Several states have attempted to impose telecommunication-specific 
taxes on downloaded music sold by communication providers, taxes which 
would not be imposed on similar products sold by non-communication 
companies.
  A consistent, national framework for the state and local taxation of 
digital goods and services is therefore needed to ensure the fair, 
consistent and equitable taxation of these goods and services.
  The Digital Goods and Services Tax Fairness Act addresses this clear 
need by establishing a uniform national framework for the taxation of 
digital goods and services.
  Our measure prohibits state and local jurisdictions from imposing 
multiple or discriminatory taxes on the sale or use of digital goods 
and services, ensuring that digital goods and services are not taxed 
differently from their physical counterparts.
  It provides that taxes may only be imposed on the retail sale or use 
of digital goods or services, preventing repeated taxation of digital 
goods and services at multiple stages of the transaction.

[[Page E1256]]

  The legislation also ensures that only the jurisdiction encompassing 
the customers' tax address may impose taxes on digital goods and 
services, preventing the consumer from being taxed by multiple states. 
For example, a consumer who lives in Virginia could download a digital 
application from a server in Washington while on vacation in Idaho. 
Without our national framework, all three states could potentially try 
and impose taxes on this transaction.
  Our measure also prevents state and local tax administrators from 
retroactively construing taxes imposed on tangible personal property to 
also apply to digital goods and services through administrative rulings 
or regulations.
  Finally, in recognition of the critical role that online health, 
energy management and education services play in our economy, our 
measure exempts these services from all state and local taxes.
  Our legislation has been endorsed by a wide range of stakeholders, 
including the Recording Industry Association of America, Verizon, 
Apple, Time Warner and Electronic Arts, among others.
  I hope my colleagues will join with us in enacting into law the 
Digital Goods and Services Tax Fairness Act of 2010.

                          ____________________