"Dear Colleague" letter.
Date: February 24, 2004.
From: Sen. George Allen (R-VA), Sen. Ron Wyden (D-OR), Sen. John Sununu (R-NH), Sen. Conrad Burns (R-MT), Sen. Gordon Smith (R-OR), and Sen. John Ensign (R-NV).
Re: S 150, the "Internet Tax Nondiscrimination Act", and S 2084, the "Internet Tax Ban Extension and Improvement Act".
Source: BellSouth.

February 24, 2004

DON’T BE FOOLED BY NEW INTERNET TAX BILL

Dear Colleague:

S. 150, the Internet Non-Discrimination Act, will likely be before the Senate in the very near future. Opponents of this legislation are floating a new bill seeking your support to tax consumers of Internet access. As Members of the Senate Committee on Commerce, Science, and Transportation, we think that it is important to provide context, truth and clarity to their position and proposal.

Represented as a so-called ``compromise,´´ the new bill is far from it. The bill merely codifies the draft amendment floated last year by Senators Alexander and Carper, which allows States that already tax consumers of Internet access to continue to tax them. The bill is an effort to gain Federal legal protection for the actions of several State and local revenue authorities that have used administrative rulings to do an end-run on the moratorium on Internet access taxes.

Here are some of the things that the pro-tax Alexander/Carper bill will do:

• Authorize existing illegal taxes on Internet access for high-speed broadband connections (e.g., taxes on Digital Subscriber Lines) that some States and localities have imposed today. These taxes are clearly a violation of the existing moratorium and are exactly the purpose of the tightening language included S. 150. We should not grandfather or provide amnesty for this taxing behavior.
• Authorize new taxes by narrowing the definition of Internet Access to cover only the connection between purchaser of Internet access and the Internet service provider. Tax collectors will merely push the taxes up the network line and consumers will pay these taxes in one form or another. States and localities are permitted to impose new Internet taxes with no political accountability.
• Scale back the moratorium's life to only two years. S. 150 has been about ending once and for all the ability of States and localities to tax Internet access. The last limited extension of the Internet tax moratorium resulted in creative, illegally imposed taxes on Internet access by States and localities. We should not perpetuate, or condone these onerous taxing schemes.

SIMPLY PUT, SUPPORTING THIS BILL WOULD MEAN THAT YOU SUPPORT TAXING INTERNET ACCESS. Let's tackle this issue now and pass S. 150 with the various perfecting and compromises contained in the Managers’ Amendment. Real reform that will protect consumers demands no less.

Sincerely,