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June 19, 2014

PITFA Moves to House Floor After Judiciary Markup Some Committee Members Seek MFA Review

IPI expert referenced: Bartlett Cleland | In The News | Media Hit
  Washington Internet Daily

By Joe McKnight

The Permanent Internet Tax Freedom Act (PITFA) is headed to the House floor after passage in a House Judiciary Committee markup vote Wednesday.

HR-3086 was approved 30-4, with House Judiciary Committee members Judy Chu, D-Calif., David Cicilline, D-R.I., Jerrold Nadler, D-N.Y., and Bobby Scott, D-Va., voting no. PITFA "permanently bans taxes on Internet access," said House Judiciary Chairman Bob Goodlatte, R-Va., in a joint statement with Rep. Anna Eshoo, D-Calif., Subcommittee on Commercial Law Chairman Spencer Bachus, R-Ala., Subcommittee Ranking Member Steve Cohen, D-Tenn., and Rep. Steve Chabot, R-Ohio Wednesday. Goodlatte is the sponsor of the bill, which has 221 House co-sponsors.

"This broadly bipartisan bill ensures that access to the Internet is not burdened by unnecessary costs and that Americans can continue to access the Internet tax free," said their statement.

It's "an important step toward heading off Internet access taxation," said Jot Carpenter, CTIA vice president-government affairs, in a statement. "We hope the full House will follow suit as soon as possible." AT&T congratulated the committee, and the bill received support from Americans for Tax Reform, the Internet Tax Freedom Act Coalition, Information Technology and Innovation Foundation and NetChoice prior to the hearing (WID June 18 p12 June 17 p8). The National Governors Association opposed the bill on states' rights grounds.

An amendment that would have extended the moratorium on Internet access taxes by four years -- not permanently -- and which would have grandfathered states exempted from the 1998 Internet Tax Freedom Act was submitted by House Judiciary Committee ranking member John Conyers, D-Mich., and member Sheila Jackson Lee, D-Texas. Conyers and Jackson Lee, whose amendment was defeated 12-21, abstained on the bill's final markup vote.

"Congress must be mindful of any legislation that may impact state revenues," said Conyers. "I do not understand the point of the bill," said Nadler, who criticized HR-3086 as an imposition on states' rights. "We have a ubiquitous telephone system," just like the Internet, but Congress doesn't tell states they can't tax telephones, said Nadler. State economies are "so much better off thanks to the Internet," and if Congress doesn't protect the existing tax structure, it will be to the states "detriment," said House Judiciary member Darrell Issa, R-Calif.

"The move by the House Judiciary Committee to make the internet tax moratorium permanent is simply bad policy that prevents local communities from making their own decisions and determining how the programs and services they deliver to their residents," said Clarence Anthony, National League of Cities executive director. If the moratorium were "allowed to expire, states would begin to collect taxes on Internet access, or apply other discriminatory taxes that may already be in place but which have been held at bay during the moratorium," said Bartlett Cleland, Institute for Policy Innovation resident scholar of tax and innovation policy.

Several House Judiciary members expressed interest in a committee hearing on the Marketplace Fairness Act (MFA) (HR-684), including Jason Chaffetz, R-Utah, Suzan DelBene, D-Wash., and Hank Johnson, D-Ga. The MFA would authorize states to collect an e-commerce sales tax from out-of-state Internet retailers making more than $1 million in sales. It's "high time" for the committee to debate the MFA, said Chaffetz. He said he didn't agree with the version of the MFA the Senate passed last year (WID May 8/13 p2).

"MFA seeks to impose a radical tax regime on remote sellers," said Steve DelBianco, NetChoice executive director, by email. "Comparing MFA with" PITFA "is like comparing apples to arsenic," he said: "The fundamental flaws with" MFA "won't be solved by a simple markup, whether it takes place in three weeks or in three years."


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