New IPI Study: No Internet Tax? Don't Be So Sure; Alarming State, Local, Federal & International Threats
Contact: Sonia Blumstein of the Institute for Policy Innovation,
703-912-5742 or snipped-for-privacy@ipi.orgWASHINGTON, Feb. 6 /U.S. Newswire/ The Internet Tax Moratorium expires in 2007, and state, federal and international regulators and legislators are already targeting the Internet as a lush source of new revenue, says a new report released today by the Institute for Policy Innovation (IPI).
George Pieler, an IPI research fellow and author of "No Internet Tax? Don't Be So Sure," points out that, "Absent a sweeping federal intervention to secure the Internet's freedom, it will be an increasingly rich target for revenues and regulatory interference from all directions."
STATE & LOCAL THREATS: One indication of states' eagerness to collect Internet taxes is that they quickly began taxing VoIP (Voice over Internet Protocol). Because VoIP competes with traditional telecom services, the 2004 moratorium did not consistently block its taxation. If states are so quick to take this tax advantage, what is to stop them from taking even more Internet revenue?
"It would be better if competition from VoIP was used as an occasion to rethink telecom taxation from the ground up," writes Pieler.
FEDERAL THREATS: The Federal Communications Commission (FCC) is targeting VoIP for contributions to the "Universal Service Fund" (USF). There is no surprise here, however. The USF is not a legislated tax, and therefore with minimum scrutiny and oversight from the congressional budget and appropriations process, is wide open to increased funding through taxation.
INTERNATIONAL THREATS: In November of last year, the UN failed in an attempt to create a globally-controlled Internet. If UN had succeeded, there would be strong pressure to make the currently operating Digital Solidarity Fund (DSF) -- a UN program designed to encourage companies to donate part of their profits to the fund for "public technology projects" -- required instead of optional.
According to Pieler, "As in the United States itself, the universal assumption that the Internet should be minimally regulated, and not taxed per se, rapidly seems to be vanishing."
THE SOLUTION: "Before the Internet Tax Moratorium expires in 2007, Congress and the executive branch should seriously review Internet taxation from the local, state, national and international perspective, and determine how best to sustain the largely tax-free Internet, that has done more good for the world than any bureaucracy ever could," concludes Pieler.
The Institute for Policy Innovation (IPI) is an independent think tank with offices in Washington, DC and Dallas, TX.