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This letter was sent to every member of the House Judiciary Committee.
May 3, 2000 Honorable Henry Hyde Honorable John Conyers
Dear Representatives Hyde and Conyers: We write on behalf of the National Conference of State Legislatures to express our opposition to H.R. 3709, the Internet Nondiscrimination Act, scheduled for a mark-up by the Judiciary Committee on Thursday, May 4, 2000. H.R. 3709 will make the moratorium on state and local taxes on Internet access permanent, even though the current moratorium does not expire until October 1, 2001. We believe that the members of Congress and the information technology industry representatives who advocate making the moratorium permanent have failed to provide a single sound public policy explanation as to why this action needs to occur at this time when the moratorium is still in effect for another seventeen months. The Committee's willingness to vote on making the moratorium permanent without any public hearings or research to determine the impact of such action, not only on state and local governments but also on other telecommunications service providers as well is disappointing. Is the Judiciary Committee prepared to define just what "Internet access" will be in two years or five years from now? Today, we know Internet access generally refers to the $19.95 (+/-) consumers pay for their monthly access to the "net" through America Online, Mindspring, Microsoft and so on. However, as we witness the convergence of technologies and the merger of industry giants, what we call "Internet access" may soon cover a number of other technologies and services. For example, telephony technology is quickly improving to allow consumers to actually make telephone calls and speak over the Internet. Thus consumers may soon be able to make long distance calls while online at no additional cost other then the fee paid for Internet access. As states would be prohibited from imposing any tax on Internet access, even if it included phone service, state and local revenues will decline; and traditional phone companies would be at a competitive disadvantage to Internet service providers. Congress, therefore would be in the position of picking winners and losers in the "new economy." We also are concerned that as the industry mergers continue, consumers will soon be receiving their telephone, cable television and Internet service from the same vendor. The vendor could bundle all these services for one price under the banner of Internet access. If states and local governments are prohibited from ever taxing Internet access, then states and localities would have to find new revenue sources to make up for the loss from not being able to tax telephone and/or cable services. By approving this legislation, we believe Congress would be trampling on one of the major tenets of federalism, the rights of sovereign states to decide their own taxation policy. The Congress elected in 1994 made a pledge to restore the balance to federalism and in 1995 overwhelmingly approved the Unfunded Mandates Relief Act. We find it incredulous that the members of this Congress, many of whom were elected in that historic election, would today seek to overturn that commitment and very possibly force onto state and local governments one of the largest and most egregious unfunded federal mandates. We join our colleagues from across the country in respectfully requesting that you oppose this legislation. Tomorrow, we and over 100 of our colleagues from across the country will be making visits to our members of Congress. Should this legislation be reported from the Committee, we will be interested in hearing your explanation as to the urgency of H.R. 3709, when there are so many other major public policy issues which Congress must address before adjournment. Sincerely, Senator Steven Rauschenberger, Illinois
Representative Matthew Kisber, Tennessee
Senator Joanne Emmons, Michigan
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