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Executive Committee Task Force on State and Local Taxation of Telecommunications and Electronic CommerceState Legislatures Oppose Unwarranted Extension of Internet Tax MoratoriumPolicy StatementWHEREAS, in 1998 the 105th Congress passed and the President signed into law the Internet Tax Freedom Act, establishing a three year moratorium on the imposition of any state and local tax on Internet access, and multiple and discriminatory taxes on electronic commerce transactions; and WHEREAS, the legislation also grandfathered those states which were applying and collecting a tax on Internet access at the time of its enactment (Connecticut, Iowa, Montana, New Mexico, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Texas, Washington, and Wisconsin); and WHEREAS, the current moratorium does not expire until October 21, 2001, which is 15 months away; and WHEREAS, in the preceding 19 months not one state attempted or even announced any desire to tax Internet access, or apply multiple or discriminatory taxes to the Internet; and WHEREAS, during this time two of the original grandfathered states have by legislative action removed the tax on Internet access; and WHEREAS, several bills have been introduced in the 106th Congress to either make the moratorium on state and local taxes permanent or extend it for another two to eight years; and WHEREAS, H.R. 3709, which would extend the moratorium on state and local taxes on Internet access for five years, October 21, 2006, and repeal the grandfather clause has passed the U. S. House of Representatives and is pending in the Senate; and WHEREAS, extending or making permanent the moratorium will pose grave financial risks for state and local governments as well as telecommunications industry providers; and WHEREAS, with the increasing convergence of technologies and mergers of industry giants, the present definition of Internet access may indeed be inadequate to define exactly which communications technologies will fall into the category of Internet access in the future, even as soon as next year; and WHEREAS, with the mergers of Internet service providers, cable television and telephone companies, Internet access may soon mean a consumer's monthly access to the Internet would include phone service and cable TV, all of which the provider could bundle for one fee under the banner of Internet access; and WHEREAS, in such situations, state and local governments could see major reductions in revenues as existing state and local taxes on telecommunications services and cable television could fall under the moratorium and therefore be preempted by federal law; and WHEREAS, the states' inability to collect these taxes will create an unfair competitive advantage for Internet service providers at the expense of traditional telecommunications service providers and cable operators; NOW, THEREFORE BE IT REOLVED, that as the current moratorium as established by the Internet Tax Freedom Act of 1998 does not expire until October 21, 2001, and that as the proponents of extending the moratorium have failed to justify that such action is warranted, the National Conference of State Legislatures will oppose current congressional efforts to extend the moratorium; and BE IT FURTHER RESOLVED, that as information technology and telecommunications providers merge and technologies converge, NCSL calls for a cooperative effort between government and the industries involved to clearly define the scope of Internet access and delineate what service are covered by the term "access fee;" and BE IT FURTHER RESOLVED, that NCSL will continue to oppose any federal action to preempt the sovereign and Constitutional right of the states to determine their own tax policies in all areas, including telecommunications and electronic commerce; and BE IT FURTHER RESOLVED, that a copy of this resolution be delivered to the President of the United States and all the members of the 106th Congress. Unanimously passed the NCSL Executive Committee Task Force on State and Local Taxation of Telecommunications and Electronic Commerce July 15, 2000 Unanimously passed NCSL Executive Committee July 16, 2000 Unanimously passed NCSL Business Meeting July 19, 2000 |
