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Hatch, fellow senators should pass clean Internet tax ban

Sen. Orrin Hatch, R-Utah, is interviewed in Salt Lake City, Thursday, Aug. 7, 2014.
Sen. Orrin Hatch, R-Utah, is interviewed in Salt Lake City, Thursday, Aug. 7, 2014.
Ravell Call, Deseret News

Our nation’s dysfunctional Congress is something we are all too familiar with. This phenomenon reared its ugly head most recently when House Democrats deserted President Barack Obama to defeat a portion of a large trade agreement — one on which Republicans and Senate Democrats met in the middle to bring forward.

But wins still happen, even if they seem small.

The House of Representatives just unanimously passed the Internet Tax Freedom Act (ITFA), a ban on Internet access taxes by state and local governments. Passed initially in 1998 to help spur Internet deployment and adoption by reducing costs, this popular policy has been extended five times.

This go around the measure would permanently ban the taxes, forever ending the possibility that some of the more than 10,000 different taxing jurisdictions could tax your Internet access. Because communications services are highly taxed compared to most goods and services — 17 percent on voice services and 12 percent on cable on average — they are ripe targets for local taxation.

For consumers, passing the measure is a clear win that helps keep costs down. As the bill’s sponsors, congressmen Bob Goodlatte, R-Va., and Anna Eshoo, D-Calif., said when the permanent ban passed the House, it is “a necessary measure to keep Internet access free of taxation.”

The House ITFA bill had 188 co-sponsors from across the political spectrum. This is no accident. It is a simple, straightforward, no hidden agenda piece of legislation, supported by leading senators, including Finance Committee Chairman Orrin Hatch, R-Utah. If it were brought to the Senate floor, it would pass overwhelmingly. After all, what senator is going to vote for increased taxes, let alone if they are up for reelection?

Enshrining the ban into law, however, will not be easy because of a totally separate piece of legislation known as the Marketplace Fairness Act (MFA), which deals with online sales taxes. In short, MFA would allow state governments to collect sales taxes from remote retailers, such as Amazon, with no physical presence in their state. It is mostly supported by members of Congress from states with no income tax, thus reliant on dwindling sales taxes in the face of rising online sales.

Last year, MFA supporters, including Sens. Mike Enzi, R-Wyo., and Heidi Heitkamp, D-N.D., tried to pair the separate tax measures into a combined bill. Now this small contingent of Senators are looking to do the same this year.

For all the beneficiaries of the Internet tax ban, this spells trouble and must be stopped.

The MFA certainly has merits. As does a totally separate piece of bipartisan legislation recently introduced by Utah Republican Jason Chaffetz, which would also attempt to tackle online sales taxes. According to a June poll from Morning Consult, the Chaffetz measure is actually favored compared to its competition in Congress.

But regardless of what legislators or constituents think of these pieces of online sales tax legislation, the issues must not be conflated. In the recent words of Sen. Ron Wyden, D-Ore., an ITFA champion, it is “legislative malpractice” to do so.

Solving the online sales tax debate is a complicated issue, one that requires sacrifice and compromise — something Congress and industry is not excelling at lately. With the 2016 election season looming large this fall, Congress must advance the vast majority of bills before the August recess for passage in 2015. There is simply too much at stake for consumers, already dealing with extensive add-on fees, to conflate the issues and risk the expiration of ITFA.

Rather than continue down this path of political gamesmanship, the Senate should do what is right for consumers and pass the tax ban. Otherwise, we will all be paying the cost.

Hon. Christopher D. Coursen is founder of the Status Group. He formerly served as majority communications counsel for the Senate Commerce Committee and advised the Ronald Reagan and George H.W. Bush administrations.