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This floor alert was sent to every member of the United States House of
Representatives
Floor Alert
National Conference of State Legislatures
Office of State-Federal Relations
May 9, 2000
CONGRESSIONAL BUDGET OFFICE DECLARES:
H.R. 3709 IS AN UNFUNDED FEDERAL
MANDATE
VOTE NO ON H.R. 3709 TO PROTECT YOUR STATE'S
REVENUES!
The U.S. House of Representatives will vote Wednesday, May 10, on H.R.
3709, legislation that will extend the current moratorium on state and
local taxes on Internet access for an additional five years, and repeal
the grandfather clause that protects the eleven states currently
collecting a tax on Internet access.
On May 8, 2000, the Congressional Budget Office released the following
statement: "H.R. 3709 Contains no private-sector mandates, but by
extending and expanding the moratorium on certain types of state and local
taxes, the bill would impose an intergovernmental mandate as defined in
the Unfunded Mandates Reform Act (UMRA)."
- The current moratorium on Internet access taxes as
established in the Internet Tax Freedom Act of 1998, does not expire
until October 1, 2001, some 17 months from now. There is
sufficient time next year to extend the moratorium if it is
warranted.
- Today, we know Internet access generally refers to the $19.95 (+/-)
consumers pay for their monthly access to the "net." However, as we
witness the convergence of technologies and the merger of industry
giants, what will Internet access mean in two years or even next
year? Consumers will soon be receiving their telephone, cable
television and Internet service from the same vendor. The vendor will
be able to bundle all these services for one price under the banner of
Internet access. If states and local governments are prohibited from
taxing Internet access in the future, then states and localities will
have to find new revenue sources to make up for the loss from not being
able to tax telephone and/or cable services.
- H.R. 3709 as reported from the House Judiciary Committee would
repeal the grandfather clause enacted in the original Internet Tax
Freedom Act, which allowed those states presently collecting a tax
on Internet access the ability to continue to do so. The states of
Connecticut, Hawaii, New Hamphsire, New Mexico, North Dakota, Ohio,
South Dakota, Tennessee, Texas, Washington and Wisconsin would face an
immediate reduction in current revenues. It is estimated that the
states listed above are currently collecting over $75 million in
revenues from taxes on Internet access.
Your vote will determine whether your constituents will have to
experience a cut in services such as education and public safety or a hike
in other state taxes.
H.R. 3709 tramples on one of the major tenets of federalism, the rights
of sovereign states to decide their own tax policy. NCSL
finds it incredulous that Congress would seek to force onto state and
local governments one of the largest and most egregious unfunded
federal mandates and to undermine the devolution for which so
many members of Congress have endeavored.
For more information contact Neal Osten 202-624-8660 or
Graham Williams 202-624-8683.
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