House Judiciary moves to ban higher taxes on digital items

The House Judiciary Committee unanimously approved a bill on Thursday to ban states and local governments from imposing special taxes on digital items.

The Digital Goods and Services Tax Fairness Act bars "multiple or discriminatory taxes" on digital items, such as music files, mobile applications or e-books.

Committee Chairman Lamar Smith (R-Texas) said taxes should apply equally to digital and tangible goods.

"The fact that consumers increasingly prefer to consume goods and services in digital rather than tangible form should not prompt states to impose unfair taxes," Smith said.

Steve Largent, president of wireless industry association CTIA, said the bill will "bring some clarity and consistency to the digital marketplace." He urged the full House to vote on the measure soon.

The bill approved by the committee on Thursday was an amended version of the measure introduced last year.

The lawmakers made a series of changes to address the concerns of state and local taxing authorities. 

Challenges under the bill will now be brought in state instead of federal court. Lawmakers also delayed the effective date of the law to give tax administrators more time to implement its provisions.

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