DMA Backs No-Net-Tax Bill

The Direct Marketing Association voiced support Friday for a new Senate proposal that would make permanent an existing moratorium on taxes unique to the Internet, including Web access.

The Permanent Internet Tax Freedom Act, introduced by Senators Ron Wyden (D-OR), John McCain (R-AZ) and John Sununu (R-NH), would also prohibit states from taxing Internet purchases if they don’t also impose taxes on items bought through catalogs or phone sales.

Congress first enacted a temporary ban on Internet-only taxes in 1998 and has extended that ban twice since then. The current moratorium expires in November 2007.

A bloc of senators in the last Congress objected to a permanent Internet-tax ban approved by the House in 2003, saying that the measure would prevent states from collecting taxes on voice over IP phone services. As a compromise, in 2004 the Senate passed a temporary extension that allowed for taxation of VoIP calls.

“Why should a product that’s not taxed on the street or taxed in a store be taxed on the Internet?” Wyden said in a statement after introducing the new bill on the first day of the 110th Congress. “It’s unfair, anti-competitive and would greatly harm one of the booming sectors of our economy.”

The DMA expressed support for the new Senate proposal, pointing out that it would prevent “double taxation” of a product or service bought over the Internet.

“The ban on taxing Internet access is an important protection that helps keep the Internet affordable and ensures a competitive, open marketplace for global commerce and communications,” Jerry Cerasale, DMA senior vice president for government affairs, said in a statement.

The Information Technology Association of America and the United States Telecom Association have also come out in support of the permanent Net tax ban.