U.S. Sens. Angus King and Susan Collins gave many Mainers a smile when they recently advanced a resolution declaring Sept. 25 “National Lobster Day.” This is nothing new — other lawmakers have made similar home-state gestures. Yet, whether they’re seafood lovers or not, just about all Americans could be adversely impacted by a serious event that will occur just a week after National Lobster Day.
On Oct. 1, a nationwide ban that prevents states and localities from slapping taxes on Internet access will expire. The House of Representatives recognized this threat and has passed safeguard legislation known as the Permanent Internet Tax Freedom Act, but the Senate has not acted on the lower chamber’s bill or its own companion measure. If this situation continues, we could all see new state and local taxes piled on top of existing Internet service prices. Maine’s two senators, often viewed as deal brokers, may hold the key to preventing this nightmare scenario.
When the first Internet Tax Moratorium was signed into law in 1998 by President Bill Clinton, demand for this new information technology boomed because costs to consumers (such as taxes) were kept low. In the meantime, private investment into online infrastructure has skyrocketed. As a natural consequence, the Internet’s reach and speed have both dramatically increased, in turn encouraging many businesses to expand their customer base and hire more employees. Now more than 96 percent of Mainers have access to wireline service, ranking their state as 24th-most connected in the country.
To extend the moratorium again, hopefully permanently this time, leaders in the Senate will need to overcome parliamentary maneuvers seeking to tie the access ban’s fate to a separate bill called the Marketplace Fairness Act. This highly controversial legislation, cosponsored by both Collins and King, would give a federal blessing for states to enforce taxes on businesses outside their borders that sell to customers through the Internet and mail orders. In 2013, Collins even went so far as backing the Marketplace and Internet Tax Fairness Act, which combined the two non-related matters into one bill.
History must not repeat itself. Congress, especially Collins and King, should avoid linking the issue of collecting Internet sales taxes in the Marketplace Fairness Act to protecting Americans from Internet access taxes in PITFA. The two matters should be dealt with separately.
But if political gamesmanship prevails — resulting in near-certain gridlock with the House — the Internet could be subject to taxes twice as high as those imposed on the sale of other goods or services. This means Maine Internet users could see a double-digit hike in their monthly bill for Internet service, which could push some offline and limit the vital web resources that they have grown to rely on for education, e-commerce, and medical advice.
With the passage of “clean” legislation extending the moratorium on access taxes, Congress can land itself a big win while giving an even bigger victory to taxpayers. Unlike many other divisive issues, this one is can be resolved under the right circumstances.
There are many reasons Gov. Paul LePage should reverse his support for MFA, including the fact that it is tremendously unpopular with fiscal conservatives and that it would subject his state’s businesses to other states’ harsh audit tactics. Nonetheless he unwittingly made a point when, in advocating for MFA three years ago, he wrote, “Give Maine people a chance to compete on a level playing field and they will shine.”
Actually, in today’s digital age, being able to compete at home and abroad means keeping costs down, especially those imposed by government. A permanent ban on Internet access taxes is a perfect way to do so. The Senate should pass it before it is too late.
Pete Sepp is president of the National Taxpayers Union ( ntu.org), a nonpartisan citizen group founded in 1969.