US: Senate is urged to pass Internet Tax Moratorium act

It comes against the backdrop of US House of Representatives decision to pass the Permanent Internet Tax Freedom Act (PITFA), which extends a moratorium on internet access taxation.

In a letter to all senators, the coalitions members say that failure by the Senate to act before 1 November, 2014 when the present moratorium expires, will lead to increased taxes for internet consumers, who are currently protected from additional costs when using the internet, and from the discriminatory taxation of ecommerce.

The letter adds that taxes on communications services are notably high as the average sales tax rate on voice services is 17% and 12% on video services. The average general sales tax rate is 7%, by comparison.

However, prior to the summer recess, the prospect of a clean equivalent to the PITFA being passed in the Senate was being complicated by certain lawmakers looking to link it with the more controversial Marketplace Fairness Act (MFA), which would allow states to impose sales taxes on online purchases, and which remains stuck in the House Judiciary Committee.

The MFA has been delayed in the Republican-led House, where it has encountered a great deal of opposition and delay, mainly due to an aversion to what is considered to be a hike in taxation and an increase in tax compliance burdens on smaller businesses.