Sununu to Support Internet Tax Ban; Could Cost NH Millions
WASHINGTON – Sen. John Sununu announced his support Wednesday for an Internet tax ban that could cost New Hampshire millions of dollars. Two of the state’s three other representatives in Congress, Sen. Judd Gregg and Rep. Jeb Bradley, both Republicans, also support the ban.
“The Internet is a technological tool used by millions of Americans to transact business,” Sununu said in a statement. “Access to it deserves to remain free from tax burdens that will hinder our country’s potential for economic growth.”
Since 1998, the Granite State has been exempt from a temporary ban that barred other states from taxing Internet connections and from taxing Internet purchases differently from the way they tax other purchases. It also prevented more than one state from taxing the same sale.
New Hampshire was allowed to continue to collect taxes on Internet access despite the ban because its 7 percent tax on all two-way communication within the state, including telephone calls, began in 1990, well before the 1998 moratorium. But Sununu said states that jumped to tax the Internet before Congress acted “will have to resolve their issue.”
But the ban expired Saturday. And a bill sponsored by Sen. George Allen, R-Va., to extend it indefinitely would eliminate exemptions for New Hampshire and nine other states in 2006.
The bill’s supporters argue that taxing Internet connections hurts free expression. They also contend it would unfairly affect low-income people less able to pay the tax.
States are the primary opponents of the ban. Officials from the New Hampshire Department of Revenue Administration could not be reached for comment late Wednesday. Some estimates show the ban could cost the state $5 million to $15 million a year.
New Hampshire Republican Congressman Charles Bass fought a similar House bill to ban Internet taxation in September, though he has said he opposes taxing the Internet. Bass has said that the ban would interfere with states’ rights to levy taxes and that it would be unfair for the federal government to impose a law that would cost states so much. The bill passed the House by a voice vote.
“What this bill does is eliminate the ability of the state of New Hampshire and áother states to collect revenue on what is justifiably a state-centered tax,” Bass said on the House floor.
The House version of the bill would eliminate New Hampshire’s exemption immediately. A spokesman said Bradley did not oppose the bill based on assurances he’d received that the exemption would be extended for three years in the Senate version.
If the Senate passes its version of the ban, which Gregg is c-sponsoring, House and Senate negotiators would hammer out a final version of the bill.
The core argument, Sununu said at a press conference, is whether access to the Internet is fair game for taxation.
“If you’re standing up to protect the right of these states to continue to levy these taxes, then you are effectively saying, ‘I believe the Internet should be taxed,’ ” Sununu said.
Charlie Arlinghaus, president of the Josiah Bartlett Center for Public Policy, a non-partisan think tank based in Concord, said taxing the Internet goes against the core reason that taxes exist: to pay for services.
“There is not a building that exists [on the Internet] that needs fire protection, there are no parking issues or traffic issues,” Arlinghaus said. “The only excuse for taxing the Internet is because you think government needs more money, and I think, by and large, the American public has been encouraging policies that do not take more money from their pockets.”
