Betsy
Chapman:
Beware the camel’s nose
Have
you noticed how the taxes on telephone service have multiplied? On my
recent cellular telephone bill the Federal Excise Tax and Maine Sales
Tax amounted to 7.9% of the total. But this pales in comparison to my
local long distance service where I am charged for six different taxes
totaling 19.7% of the total! The camel’s nose is under the
tent and actively taxing telephone service.
Currently there is a battle in the U.S. Congress to open the door to
taxing Internet service. This isn’t tax on goods purchased online,
but tax on the monthly Internet service. Many are concerned that taxes
will be harmful to the growth of access to this important service, particularly
in a rural state like Maine. Congress is in the process of debating whether
or not to continue the moratorium on not taxing the Internet.
Economic development planners and elected officials often use the Internet
and telecommunications “as light at the end of the tunnel” for
Mainers looking for new jobs or better jobs in the wake of Maine’s “decaying
natural resource and manufacturing jobs.” Mainers with families
to raise and few work options do have the Internet. Starting an online
business is an inexpensive way of climbing out of an economic hole, escaping
a hopeless future, or of scaling the ladder of success.
To diminish that opportunity by saddling budding Maine entrepreneurs
with a new tax— in a real way, tarnishing what may be their last
glimmer of hope—is unthinkable.
Fortunately it is President George W. Bush’s policy to have broadband
Internet access available to all Americans. In his statement upon signing
the initial moratorium on tax the Internet, President Bush wrote, “The
Internet is an innovative force that enables such applications as distance
learning and precision farming. Government must do its part to make access
to these services affordable. It should not raise costs through additional
taxation.”
In many areas of Maine broadband access is still not an option. The residential
broadband access we do have in Maine costs around $50 per month (not
including sign-up costs and setup costs). That means many areas of Maine
have Internet access which is below par for cutting-edge businesses.
Rural Maine small businesses and home businesses relying on the Internet
are often at a disadvantage to their urban counterparts in Maine, other
states, even in other nations.
Will a tax on Internet access attract cutting-edge employers to Maine?
Will it put Maine small business owners and home business owners on a
competitive playing field with the rest of the world? Will it help Maine
rise out of its poor economy and the high unemployment rate? No.
Why would we, as a state, make a heroic effort to put laptop computers
in the hands of students and then tax their use of the Internet? Our
lawmakers must advance ideas that help create more investment, thereby
creating more jobs and prosperity rather than more burdens from taxation
and regulation.
The moratorium on taxing Internet access needs to be made permanent.
We would hope that all our lawmakers would want to help the Internet
grow and flourish as a viable tool for education, information, and commerce.
I stand on the side of freedom of the Internet, trusting free people
and free entrepreneurs—not on the side of making this advancement
in technology easier to tax for the tax collectors.
Basic telephone service is expensive in Maine and already loaded with
taxes and fees. The moratorium banning access taxes and taxes that discriminate
against the Internet is a way to prevent the same from happening to this
dynamic technology.
Taxing Mainers’ Internet access is neither good fiscal policy nor
sound public policy. Let’s be vigilant in keeping the any tax collecting
camels away from this tent!
Betsy Chapman is Board Chair of the Maine Public Policy Institute,
a non-profit, non-partisan free market public policy research and education
organization. For more information see www.maine
institute.com.