Come Friday midnight, e-mail taxes could become real. Or businesses could get abigger tax break. Or things could stay the same. And you can influence the outcome.
If nothing is done in Congress by Friday midnight, the 1998 Internet Tax Freedom Act expires and the Internet becomes fair game for the feds, states, counties, cities and just about any other taxing authority know to man. Here's how the Wall Street Journal, friend of business, talks about the situation:
"You will double-up the price of plain old Internet access faster than a dog can jump on a meat wagon," predicted Senator Wyden last week. But that's just the beginning. With no law to stop them, state and local officials can start taxing everything from spam filters to instant messages to Google searches. E-mail taxes alone would be a gold mine for free-spending politicians across the country. At a Senate hearing on spam in May, Minnesota Democrat Mark Dayton suggested "looking at some very, very small charge for every e-mail sent."
He's not alone. States and cities love the idea, and not just because of the potential for taxing, say, cross-country e-mails. Governors, mayors and county officials are thinking locally, too. A message sent by you to your neighbor per next Saturday's barbecue might easily pass through computer servers located in several of the nation's 7,600 different taxing jurisdictions. [Taxing Your E-Mail] [requires subscription]
Senator George Allen, Virginia Republican defends his bill (he would, wouldn't he) even if the best thing about it is the name (Internet Tax Nondiscrimination Act).
Okay, so that's the scare from business and those who get those juicy campaign contributions. They want the new Senate bill passed not because what it will save you, but because it gives them even more tax breaks and contributions, by reclassifying cable companies as "Internet services."
Local municipalities and several watchdog organizations nationwide are lobbying to patch what they claim is a billion-dollar loophole in the proposed Internet Tax Nondiscrimination Act of 2003.
The act is an amendment to the Internet Tax Freedom Act, which bans taxes on Internet services.
Municipalities and watchdog groups fear the language of the new act would free cable and telecommunication companies from paying franchise fees for the use of the public rights-of-way to install cable or fiber optic systems.
AT&T, Sprint, SBC, MCI, EarthLink and Comcast are some of the major companies in the area that provide phone, cable and Internet services.
If a company is classified as a telecommunications service, it is subject to regulation and, therefore, fees. If considered an Internet or information service, it is pardoned of such regulation under the Internet Tax Freedom Act. [Cable firm or telecom?]
State governors have the right take on the situation, and an approach that's good for you and me and them.
The National Governors Association (NGA) Thursday called on Congress to extend the existing moratorium on Internet access taxes that expires on Nov. 1, but cautioned lawmakers from broadening the ban to include telecommunications services.
The U.S. House of Representatives on Sept. 17 passed a bill to make the current moratorium permanent, and similar legislation in the Senate may be voted on as early as next week. Opponents to a permanent ban say the House and Senate bills make substantive changes to the current law that could eventually cost states as much as $9 billion annually in taxes, including eliminating a grandfather clause that preserves state and local taxes on Internet access "imposed and actually enforced prior to October 1, 1998," and an expanded definition of "Internet access" to prevent states from taxing telecommunications services used to provide Internet access.
The NGA's concerns are over the new definition that they contend would exempt not only certain telecommunications services, but would also expand the pre-emption beyond sales taxes to include some income, property and other business taxes.
In an NGA letter to Senate leadership, Oklahoma Gov. Brad Henry and South Dakota Gov. Mike Rounds, chair and vice chair of the group's economic development and commerce committee, said, "With little time to negotiate an appropriate definition of Internet access, we encourage you to support a simple, temporary extension of current law to allow Congress, industry, and state and local governments time to fashion a permanent moratorium that is thoughtful and fair." [Governors Oppose Permanent Internet Access Tax Exemption]
This isn't an academic question: if your local taxing entities lose the cable tax, they're going to have to get it from you.