BuckeyeBlog

FoxNews has an intersting article pointing out that the federal ban on discriminatory Internet taxes will expire on November 1.

If it doesn’t extend or make permanent this moratorium, state and local governments will be free to impose taxes on Internet access, products or services purchased online and discriminatory fees that treat those purchases differently from other types of sales.

State and local government officials have been eyeing such tax possibilities for years. There’s an endless list of ways officials can tax the Internet including the taxing of email, downloads and a whole host of other transactions, services and emerging tools yet to come.

Of course, states and localities are lobbying hard for the power to start jacking up your taxes:

Regarding state and local governments, they argue that the moratorium and possible permanent ban on Internet taxes robs them of revenue sources to fund their programs. Such a permanent extension would “make it difficult for states and localities to continue to secure revenues needed to fund health care, education, public safety and other critical services,” according to the Center on Budget and Policy Priorities.

Of course, what these taxing entities and their supporters don’t want you to know is that where they have the power to tax other telecommunication services, such as cable television and phone calls, they do so at a much higher rate than other services. The Heartland Institute earlier this year released a study that found:

Taxes and fees imposed on cable TV and telephone subscribers are, on average, twice as high as taxes on other retail goods, 13.40 versus 6.61 percent.

Taxes and fees on communication services nationally add up to $37 billion a year.

Communication taxes and fees are highly regressive. Families in the lowest quintile of earnings pay 10 times as much as families in the highest quintile, as a percentage of their income.

Taxes and fees vary dramatically from city to city, with consumers in some cities paying more than three times as much as consumers in other cities.

In some cities, taxes and fees on wireline telephone service are even higher than taxes on beer and liquor.

Economists estimate the value of services lost due to high taxes and fees on communication services add up to a “deadweight loss” to society of $11.4 billion a year.

If Congress doesn’t act soon, you may see a dramatic increase in the price of your Internet service.

This entry was posted on Friday, September 14th, 2007 at 10:10 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.