Study: Internet access taxes would cost $15B

If the ban on Internet access taxes expires as planned in December, they would cost taxpayers nearly $15 billion a year, according to new study from a conservative group.


The Internet Tax Freedom Act, passed during the Web boom of the 1990s, prevents state and local governments from taxing people for access to the Internet. But the tax moratorium is about to expire, which would open the floodgates to tax collectors, according to the American Action Forum (AAF).

The AAF study found that if states tax Internet access the same way they already tax cellphones, consumers would pay $10 billion a year, while businesses would pay $4.7 billion.

"Although Internet access has become such an ingrained piece of everyday life, new taxes would induce consumers to downgrade their service, putting the brakes on quickly rising average speeds and placing downward pressure on investment," said Will Rinehart, director of technology at the AAF, who conducted the study.

In September, President Obama pushed the expiration of the Internet Tax Freedom Act back to Dec. 11, the fourth time it has been extended, but lawmakers are looking for a long-term solution.

Republicans are pushing the Permanent Internet Tax Freedom Act, which the House passed in July but is still awaiting approval by the Democrat-controlled Senate.

Without the tax moratorium, states could charge taxes for Internet access, data consumption and email, among other things.