ITFA final letter to Judiciary and full house

Wednesday, June 18, 2014

National Association of Counties
National League of Cities
U.S. Conference of Mayors
International City/County Management Association
Government Finance Officers Association
National Association of Telecommunications Officers and Advisors

June 17, 2014

Dear Representative Cohen,

On behalf of local governments across the nation, our organizations want to express our opposition to H.R. 3086, the "Permanent Internet Tax Freedom Act (ITFA)." Instead, as the expiration date for the current moratorium on taxing Internet access approaches, and Congress considers changes to ITFA, our organizations recommend a shorter-term extension of ITFA, as a sensible solution that respects state and local taxing authority. In addition, any extension must maintain both the long-standing grandfather provisions that preserve existing state and local revenues, as well as certain general business taxes that were not intended to be part of the moratorium.

Over the next several years, most of the services known as telecommunications and cable services will transition to broadband. As a result, the scope of the services that ITFA shields from state and local taxation will greatly expand, even if ITFA's language remains unchanged. In light of this substantial expansion and the need to protect the fiscal strength of state and local governments, we encourage you to support a temporary extension of ITFA, rather than making it permanent, as H.R. 3086 would do. That would allow time to assess more fully (1) the transition from telecommunications and cable services to ITFA-protected broadband services; (2) its impact on state and local governments' tax bases and revenues; and (3) its impact on the relative tax obligations of industry sectors to which ITFA does not apply. A temporary extension of ITFA ensures that Congress has the opportunity to revisit the moratorium to correct any unintended consequences.

For these reasons, our organizations urge you to support a fair, short-term extension of the Internet tax moratorium. We look forward to assisting you and your staff in these efforts.

Sincerely,

Matthew D. Chase
Executive Director, National Association of Counties

Clarence E. Anthony
Executive Director, National League of Cities

Tom Cochran
Executive Director, U.S. Conference of Mayors

Robert J. O'Neill
Executive Director, International City/County Management Association

Jeffrey L. Esser
Executive Director, Government Finance Officers Association

Stephen Traylor,
Executive Director, National Association of Telecommunications Officers and Advisors