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U.S. Senators Introduce Legislation to Ban Taxation of Internet Access

Internet Tax Freedom Act Prohibits Taxation on Internet Services

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Two Republican Senators introduced legislation which would indefinitely extend an existing law banning federal, state and local governments from taxing Internet access. The Internet Tax Freedom Act, originally enacted in 1998, will expire in November 2014.

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The Internet Tax Freedom Act, introduced by Kelly Ayotte R-NH and Dean Heller R-NV, only bans taxes on Internet access and Internet-only services like email. It does not prohibit taxation of online services. While Senator Ayotte supports legislation that would allow states to tax online purchases from other states, he does not see the benefit of deriving tax revenues from access to the Internet itself.

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“E-commerce is thriving largely because the Internet is free from burdensome tax restrictions. Unfortunately, tax collectors see it as a new revenue source, and they must be stopped,” Ayotte said in a statement. “This legislation will provide certainty to the marketplace, helping the Internet continue to be a driving force for jobs and growth.”

Likewise, Senator Heller said the government should not penalize people for buying Internet access.

"The Internet Tax Freedom Act will ensure a longstanding federal policy that prevents the government from raising taxes and preserves the Internet as a tool for education and innovation," he said.

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The original Internet Tax Freedom Act was authored by Representative Christopher Cox and Senator Ron Wyden, and signed into law on October 21, 1998 by President Bill Clinton. At the time, the law was enacted to promote and preserve the vast potential of the Internet to advance commercial, educational, and economic goals. The law bars federal, state and local governments from taxing Internet access and from imposing discriminatory Internet-only taxes such as bandwidth and use taxes and email taxes.

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The law has been extended three times by the United States Congress since its original enactment. The most recent extension was titled the Internet Tax Freedom Act Amendment Act of 2007, signed into law on November 1, 2007, by George W. Bush and extended the moratorium until November 1, 2014.

According to a statement published on her Web site, Ayotte said extending tax exemptions for Internet access will keep job growth alive:

“E-commerce is thriving largely because the Internet is free from burdensome tax restrictions. Unfortunately, tax collectors see it as a new revenue source, and they must be stopped. This legislation will provide certainty to the marketplace, helping the Internet continue to be a driving force for jobs and growth.”

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Senator Heller added the following regarding the permanent tax exemption to "preserve the Internet as a tool for education and innovation:”

“Nevadans and every American should be able to access the Internet without penalties from the federal government. The Internet Tax Freedom Act will ensure a long-standing federal policy that prevents the government from raising taxes, and preserves the Internet as a tool for education and innovation. I am pleased to work with Senator Ayotte on this issue and encourage Congress to work together to extend this act permanently.”

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