Congress permanently bans tax on internet access

WASHINGTON—A permanent ban on taxing internet access is headed to the president’s desk after the U.S. Senate overwhelmingly approved a conference report on Thursday.

“This is a great day for American consumers,” said Ajit Pai, commissioner of the Federal Communications Commission (FCC). “This confirms a national consensus that state and local taxes on internet access should be taken off the table once and for all.”

The Internet Tax Freedom Act passed as part of a customs bill that senators approved on a 75-20 vote. The legislation, H.R. 644, previously passed the House, and President Barack Obama has pledged to sign it, calling it a “milestone” of his administration.

“We are pleased the Senate passed the bipartisan customs conference report because it will provide additional tools to help crack down on unfair competition by trading partners and foreign companies that put our workers and businesses at a disadvantage,” White House spokesman Josh Earnest said in a statement.

Congress has passed a series of temporary bans on taxing internet access and email since 1998, but efforts to make it permanent have stalled—most recently because advocates of a tax on internet purchases wanted to couple the two issues. Congressional leaders broke the gridlock by promising to consider stand-alone legislation on an internet sales tax later this year.

Thursday’s bipartisan vote ensures a future Congress would have to repeal this ban in order to levy a tax on internet access. Members of both parties hailed it as a major achievement.

“If you were to allow internet access to be taxed, you’d be having yet another regressive tax, and particularly harmed would be working-class families,” said Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee.

The coming debate on an internet sales tax will be contentious and will not fall along party lines. In 2013 the Senate passed bipartisan legislation to tax all online purchases, but the bill died in the House.

The National Retail Federation (NRF), which represents brick-and-mortar stores that say internet businesses have an unfair advantage, applauded the news that Congress will again consider an internet sales tax.

“Retailers across America urge Congress to finish the job on e-fairness before more main street businesses are forced to close their doors due to unfair tax preferences,” said NRF vice president David French.