28 April 2004
Senator George Allen Says Keep the World Wide Web Tax-Free
Op-ed column by Virginia Republican Senator
(This column by George Allen, Republican senator from Virginia
and author of the Internet Tax Nondiscrimination Act, was published
in the Wall Street Journal April 28 and is in the public domain.
No republication restrictions.)
The World Wide (Tax) Web
By George Allen
The growth of the Internet over the past 10 years has provided
greater opportunity for everyone -- from the largest multinational
corporation to the smallest mom-and-pop start-up business. By giving
more people access to knowledge and information, the personal computer
and the Internet have empowered tens of millions of Americans as
consumers and entrepreneurs, and as citizens in our free society.
The content on the Internet and access to it have exploded primarily
because government regulators and taxers have stayed out of the
way. While governments are, by nature, drawn to take "their
share" of any successful private venture, for the Internet
to keep growing and for our citizens to keep benefiting from it,
government must fight its instinct to meddle and to burden creativity.
That's why Congress passed a law in 1998 temporarily banning taxes
on Internet access.
In November of 2003, the temporary moratorium on Internet-access
taxes expired, and this week the Senate will face this issue once
again. Once again, the answer is clear. We must keep access to
the Internet tax-free.
Some have asked, "Why is it important for us to act now?" For
an answer, one need only look back over the last six years, when
Internet access was supposedly tax-free. Even while the moratorium
was in place, some states desperately chose to solve their budget
problems by skirting the law and taxing elements of the Internet.
They took a general definition of Internet access and found parts
they claimed were not covered. With this tactic, if we had agreed
not to tax hamburgers, those states would have come up with a cynical
plan to tax the meat, but not the bun. We must make sure that the
avaricious tax commissars from every county, city and state in
America do not continue conniving new ways to tax the Internet
and the people who use it. Otherwise, the Tax-the-Internet advocates
will turn our freeways into toll roads like the New Jersey Turnpike.
Last year, I joined with Sen. Ron Wyden of Oregon in calling for
a permanent ban on Internet-access taxes, as well as on discriminatory
and multiple taxes on the Internet. While I continue to believe
that we should enact a permanent ban, it is clear after months
of debate that we must reach a short-term compromise if we are
to protect the American consumer.
The stalemate that has arisen can now be ended with the passage
of Sen. John McCain's amendment to our bill. His amendment, which
calls for a four-year moratorium, maintains the balance struck
by the original Internet tax moratorium. It makes Internet access
tax-free, and will continue to encourage the growth of the Internet
by protecting consumers in a technology neutral fashion. But it
will still respect and maintain state and local governments' existing
revenue base, protecting traditional taxes on telephone services.
The proposal brings simplicity and clarity to a prolonged debate.
While it takes into account the advances in technology since the
original moratorium passed in 1998, it also provides Congress,
industry, and state and local governments with the ability to revisit
the issue and make adjustments where necessary to accommodate for
new technologies and changing market realities.
It provides states and localities that have been imposing access
taxes for the past six years, and taxing high-speed DSL service
for the past two years, with a three-year window to cease such
harmful practices. This is enough time for them to get out of their
current budget cycle and adequately prepare and plan.
A key aspect of any legislation that comes from our debate on
Internet taxation must also ban taxes on broadband high-speed Internet
access. We should want to help broadband high-speed Internet grow
and, more importantly, want to help more people have access to
the wealth of educational, informational and entrepreneurial opportunities
offered by broadband. A study by the Pew Internet and American
Life Project released just last week found geographic disparities
in high-speed access. Only 10% of rural Americans have broadband
at home, compared to 28% of urban or suburban residents.
The impact of taxing broadband would be particularly harmful to
small towns and rural communities. Digital subscriber lines --
DSL -- and advances in wireless delivery systems offer an efficient
way of extending high-speed Internet access to less-populated areas.
But if these services are taxed, fewer families and businesses
will be able to afford the service and that, in turn, will make
the investment in delivery technology less attractive to broadband
The deployment of broadband is an essential component for small
business's ability to compete, especially in rural areas. As these
businesses grow, they will offer more prosperity and opportunities
for young people to obtain jobs in their home communities rather
than having to move away to find work. New taxation would cost
millions of Americans everywhere jobs and opportunities. It would
make our monthly Internet-service bill look like our telephone
bills, with multitudes of state and local taxes.
With history as our guide, I predict that if we protect the Internet
and the American consumer from stifling taxes now, we will see
more economic growth in the future. Those same bureaucrats who
are hungry for short-term tax revenue today will reap an even greater
benefit from increased economic and consumer activity tomorrow.
It is up to us to show discipline and restraint and allow the Internet
to flourish unimpeded in the decades to come.