Press Releases

Carper Says Permanent Moratorium On Internet Taxes Unfair to States

Two-Year Extension A Sensible Alternative

Nov 06 2003

WASHINGTON - Noting a current plan to permanently extend a moratorium on taxing Internet access would be unfair to states, Sen. Tom Carper, D-Del., today said he would support legislation that would ban Internet access taxes for another two years. Cosponsored by Sens. and former Govs. George Voinovich, R-Ohio, Lamar Alexander, R-Tenn., and Bob Graham, D-Fla., the amendment would extend the recently expired moratorium barring local and state taxes on Internet access, while also clarifying that all transmissions lines, including Digital Subscriber Lines (DSL), remain tax-free. The amendment is a sensible alternative to the Internet Tax Nondiscrimination Act (S. 150), which is sponsored by Sens. George Allen, R-Va., and Ron Wyden, D-Ore. That bill would permanently extend the recently expired moratorium on taxing Internet access, but it would also expand the scope of current law in ways that are not yet fully understood. Some critics have said that under the bill, many telecommunications services could end up not being taxed - a result that could be a boon for high-tech firms but one that could have serious budgetary implications for states already struggling to make ends meet. Carper said now is not the time to widen the moratorium or make it permanent. But a two-year extension would give the telecommunications industry and Congress the time to assess technological trends and craft sensible rules in what should or should not be tax exempt. "We need to take a step back before we do anything rash," said Carper. "We should extend a moratorium for two years and then revisit the issue when we have a better sense of the implications of what we're doing, both for the tech sector and for state and local taxpayers." The Multistate Tax Commissioners estimate that broadening the moratorium in the way that is being proposed by S. 150 could cost states anywhere from $2 billion to $9 billion per year. The Congressional Budget Office says it can't estimate the impact because it's unclear how the language proposed would be interpreted. "So we're handing our governors a bill, but we're going to say to them, 'We don't know how big this bill is going to be. That's your problem, not ours,'" said Carper, a former governor of Delaware. "I've been on the other side of that. That is not way to make public policy, and it's certainly no way to make permanent public policy." Carper continued, "We have not adequately considered whether the broadening of the current moratorium, as Sens. Allen and Wyden have proposed, is wise or fair public policy. We should know the implications of that before we potentially shortchange schools, hospitals and local law enforcement agencies, all of which rely on state tax revenue."