Cyber Monday is a Reminder Why Lawmakers Should Keep The Internet Tax Free

Today is “Cyber Monday,” the busiest online shopping day of the year. Last year, there was a record number of online sales with one-day purchases exceeding $2 billion.  According to CNN, this is an increase of 17 percent over 2013.  With renewed threats of Internet sales taxes coming out of Congress, there’s no better time to look at why e-commerce is so important and how Washington can make sure it continues to be a key driver of the economy.

The increase in online shopping from 2013-2014 shows that the Internet is a key driver in a strong economy.  That makes it even more baffling to think that some in Congress would be so out of touch to continue to push the idea of creating new taxes for Internet sales (click here to listen to the Taxpayer Watch that discuses the online sales taxes). Rep. Jason Chaffetz (R-Utah) recently introduced new online sales tax legislation. H.R. 2775, the “Remote Transactions Parity Act” (RTPA) would hit total sales, no matter the amount of sales in online business transactions. TPA worked with a coalition of free-market groups led by the R Street Institute and signed a coalition letter urging Congress to reject the legislation:

In seeking to address the failures of the “use tax” systems employed by states, the RTPA ends up blessing a massive expansion in state tax-collection authority and dismantling a vital taxpayer protection upon which virtually all tax systems are based. This will harm online sales, which – despite their dramatic expansion – still only account for roughly $0.07 of every $1 in retail spending.

Congress should not only stay away from taxing Internet sales, they should also make the moratorium on Internet access taxes permanent (which is set to expire on December 11 of this year).  Keeping access taxes off the Internet is a problem that lawmakers continue to kick down the road.  What is really needed is a solution that gives all online users the reassurance that they will not be taxed simply for going online.   Any expiration of the moratorium would hit online sales and in turn cause irreparable damage to the Internet-based economy.  This is a threat to taxpayers that must be removed with certainty.

The economy is still recovering at a slow pace. The last thing taxpayers, consumers, and small businesses need are new taxes that hinder the buying power of consumers and the output of businesses. While some retailers are already preparing with extended and early deals for Cyber Monday, Congress continues to do nothing helpful when it comes to making sure that the Internet is free of new taxes and regulation. The Taxpayers Protection Alliance continues to urge Congress to steer clear from any Internet sales tax legislation and move forward with a permanent extension of the Internet access tax moratorium.