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H.R. 49 & S. 150 “ Internet Tax Non-Discrimination Act ”

H.R. 49 & S. 150 “ Internet Tax Non-Discrimination Act ”. A THREAT TO LOCAL GOVERNMENTS’ FISCAL HEALTH AND RIGHT-OF-WAY MANAGEMENT AUTHORITY. The Law Today -- Internet Tax Freedom Act ("ITFA").

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H.R. 49 & S. 150 “ Internet Tax Non-Discrimination Act ”

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  1. H.R. 49 & S. 150 “Internet Tax Non-Discrimination Act” ATHREAT TO LOCAL GOVERNMENTS’ FISCAL HEALTH AND RIGHT-OF-WAY MANAGEMENT AUTHORITY

  2. The Law Today --Internet Tax Freedom Act ("ITFA") • Internet Tax Freedom Act [47 U.S.C. § 151] banned taxes on Internet access, discriminatory taxes on purchases made over the Internet, and the double-taxation (by two different states, for instance) of Internet commerce. • Expired in 2001, but was extended until 11/1/03.

  3. H.R. 49 & S. 150 -- What They Do • Permanently extend the moratorium on Internet taxes set to expire on 11/1/03. • Expand ban on Internet access taxes to include wireless, satellite and new advancements in technology to provide access to Internet services. • In expanding ban, bills capture telecommunications services.

  4. Capturing Telecommunications Services • Internet tax ban had carved out telecom services from tax ban, but bills would expand ban to any technology to extent “such services are used to provide Internet access.” • Result is that franchise fees, sales taxes and/or rights-of-way users fees could be jeopardized to the extent provider can claim percentage of network is being used to provide Internet access.

  5. Potential for Mischief • While threat and loss of revenue would be immediate, damage could grow exponentially over time as operators take advantage of the tax policy by migrating services to Internet as a means to avoid franchise fees or other fees in lieu thereof, sales taxes, & universal service fund contributions

  6. Where the Bills Stand Now • H.R. 49 • Adopted on Suspension Calendar 9/16/03. • S. 150 • Approved as amended by Senate Commerce Committee on 7/31/2003 but jurisdiction was retained to permit further amendment. • Referred to Finance Committee 9/24/03 and review must be completed by 10/24/03.

  7. TeleCommUnity Letter was sent to to Senate Commerce Committee with suggested amendment. Sample letters are at www.telecommunityalliance.org/issues/internettaxation.html Local Government's Response • Suggested Language:SEC. 5 No Impact on Rights of Way Fees or Franchise Fees • Nothing in the Internet Tax Freedom Act • shall prevent the imposition or collection • of any fees or charges for use of a state or • local government’s right-of-way, taxes in • lieu of right-of-way fees, or sales and use • taxes on telecommunications services. • Nothing shall affect or void the terms of • any existing franchise as authorized by • Sections 253, 621 or 622 of the • Communications Act of 1934, as amended.

  8. By 2006 Could cost state and local governments as much as $8.75 billion annually Source: Multistate Tax Commission. Every $1 billion lost in state & local revenue equals: 19,895 Police Officers 19,922 Firefighters 27,027 Hospital Workers 24,762 School Teachers 17,358 College Professors Potential Loss of Revenue to Local Government

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