Floor 
Alert
National Conference of State
Legislatures
Office of State-Federal Relations
S.150 –
Internet Tax Non-Discrimination Act
In the last few weeks there have been some misunderstandings with regard to the position of the National Conference of State Legislatures on S. 150, the Internet Tax Non-discrimination Act. While NCSL officially neither supports nor opposes the extension of the moratorium on state and local taxes on access to the Internet, many state legislators share the sentiments made by Senator Lamar Alexander in his recent floor speech that “…now it [the Internet] is up and going and it ought to be out there on its own with every other commercial activity.”
However, if Congress is intent on extending or making the moratorium permanent, then NCSL believes that all providers of access should be treated similarly regardless of the medium that is used to provide Internet access. NCSL has long-standing policy that declares:
1) Competitive Neutrality: State and local transaction taxes and fees imposed
on telecommunications services should be applied uniformly and in a
competitively neutral manner upon all providers, without regard to the historic
classification or regulatory treatment of the entity.
2) Tax Equity: Under a uniform, competitively neutral system, industry-specific
telecommunications taxes are no longer justified.
In extending the moratorium on Internet access taxes, NCSL would urge Congress to:
Ø Ensure at least a three year phase out of the grandfather clause;
Ø Provide for similar tax treatment of Internet access that occur through different mediums;
Ø Ensure that such treatment is narrowly defined and only can be interpreted to apply to transactional type taxes on providers of access to the Internet and cannot affect other state and local taxes;
Ø
Adopt the amendment sponsored by Senators
Allen, Wyden, Sununu, Grassley, Warner, Ensign and Gordon Smith that clarifies
congressional intent that telecommunications services are exempt from state and
local taxation only to the extent those services are used to provide Internet
access.
Finally, NCSL urges Congress to consider as soon as possible S. 1736 / HR. 3184, the Streamlined Sales and Use Tax Act, legislation much more vital to the revenue needs of state and local governments. This legislation will provide certain fiscal relief to state and local governments while ensuring that sellers are treated in a competitively neutral manner regardless of the medium used to conduct a transaction.
For more information
contact: Neal Osten, 202-624-8660 – neal.osten@ncsl.org
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