IPcentral Weblog
  The DACA Blog

Friday, December 3, 2004

Commissars at Bay
(previous | next)

President Bush today signed into law an extension of the Internet tax moratorium, a victory for anyone desiring continued growth of cyberspace. Is it everything we could have hoped for? Little that comes out of Congress is, but it's better than the alternative -- no moratorium at all.

We've actually been without a moratorium for more than a year now, but every state and local tax administrator -- the folks Senator George Allen (R-Virginia) calls "tax commissars" -- knew to hold their powder. One new tax on Internet access likely would have spurred Congress into approving the House version of the legislation, which would have made the moratorium permanent. Allen's bill also would have permanently ensured the legacy telecom tax system didn't burden new technologies and services, but it was modified in the Senate to last only until 2007, and to keep some grandfathered taxes in place.

We fought this fight in 1998. We fought it again in 2001 (that was the first moratorium Bush signed). Then we fought it once again in 2004. It seems we'll be back in the ring one more time in the 109th Congress, and likely the 110th. Legacy rent systems, like Freddy Krueger, aren't easy to kill. Otherwise rational senators such as Kay Bailey Hutchison of Texas can't help but listen to a county tax official who comes to Washington arguing that eliminating grandfathering and banning Internet access taxes will cause the county to lose its only fire engine. But somebody needs to ask how we came to be in a world where local first responders rely on Internet taxes for their existence?

As I mentioned here before, there's a much larger fight going on here. The landline phone service market is in decline, faced with a multitude of alternatives, and the taxes on those services thus are declining as well. As consumers turn to VoIP and other Internet-based services for their communications needs (how many times do you send an e-mail now when you used to make a phone call?), the telecom tax pie will shrink even more. The new law prohibits states from taxing DSL, which some had started doing by calling it a telecom service. But taxing VoIP will be too great a temptation for many of Allen's commissars, and Allen himself says the new law doesn't prohibit such taxation. I want my local firehouse to be funded as much as anyone, but I question the wisdom in preserving -- and growing -- an antiquated tax system applied to unrelated services to ensure my safety.

posted by Patrick Ross @ 3:08 PM | Communications

Share |

Link to this Entry | Printer-Friendly

Post a Comment:

Blog Main
RSS Feed  
Recent Posts
  EFF-PFF Amicus Brief in Schwarzenegger v. EMA Supreme Court Videogame Violence Case
New OECD Study Finds That Improved IPR Protections Benefit Developing Countries
Hubris, Cowardice, File-sharing, and TechDirt
iPhones, DRM, and Doom-Mongers
"Rogue Archivist" Carl Malamud On How to Fix Gov2.0
Coping with Information Overload: Thoughts on Hamlet's BlackBerry by William Powers
How Many Times Has Michael "Dr. Doom" Copps Forecast an Internet Apocalypse?
Google / Verizon Proposal May Be Important Compromise, But Regulatory Trajectory Concerns Many
Two Schools of Internet Pessimism
GAO: Wireless Prices Plummeting; Public Knowledge: We Must Regulate!
Archives by Month
  September 2010
August 2010
July 2010
June 2010
  - (see all)
Archives by Topic
  - A La Carte
- Add category
- Advertising & Marketing
- Antitrust & Competition Policy
- Appleplectics
- Books & Book Reviews
- Broadband
- Cable
- Campaign Finance Law
- Capitalism
- Capitol Hill
- China
- Commons
- Communications
- Copyright
- Cutting the Video Cord
- Cyber-Security
- Digital Americas
- Digital Europe
- Digital Europe 2006
- Digital TV
- E-commerce
- e-Government & Transparency
- Economics
- Education
- Electricity
- Energy
- Events
- Exaflood
- Free Speech
- Gambling
- General
- Generic Rant
- Global Innovation
- Googlephobia
- Googlephobia
- Human Capital
- Innovation
- Intermediary Deputization & Section 230
- Internet
- Internet Governance
- Internet TV
- Interoperability
- IP
- Local Franchising
- Mass Media
- Media Regulation
- Monetary Policy
- Municipal Ownership
- Net Neutrality
- Neutrality
- Non-PFF Podcasts
- Ongoing Series
- Online Safety & Parental Controls
- Open Source
- PFF Podcasts
- Philosophy / Cyber-Libertarianism
- Privacy
- Privacy Solutions
- Regulation
- Search
- Security
- Software
- Space
- Spectrum
- Sports
- State Policy
- Supreme Court
- Taxes
- The FCC
- The FTC
- The News Frontier
- Think Tanks
- Trade
- Trademark
- Universal Service
- Video Games & Virtual Worlds
- VoIP
- What We're Reading
- Wireless
- Wireline
Archives by Author
PFF Blogosphere Archives
We welcome comments by email - look for a link to the author's email address in the byline of each post. Please let us know if we may publish your remarks.

The Progress & Freedom Foundation