ITFA Supporters Seek Backing To Override Expected Challenge to Permanent Ban Extension in Customs Bill
Supporters of a permanent extension of the Internet Tax Freedom Act (ITFA) are working to ensure an ITFA extension remains a part of the Trade Facilitation and Trade Enforcement Act despite a plan by Sen. Lamar Alexander, R-Tenn., and Senate Democratic Whip Dick Durbin, D-Ill., to seek a point of order that an ITFA extension is outside the bill's scope. Alexander and Durbin are both supporters of combining the permanent ITFA extension with the more controversial Marketplace Fairness Act (MFA). The Senate is expected to turn back to consideration of HR-644 later this month, after stalling on the bill in December. The House passed HR-644 Dec. 11 with the permanent ITFA extension language included as part of conference negotiations (see 1512110058).
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“We're still looking” at where support stands on keeping an ITFA extension in HR-644, Senate GOP Whip John Cornyn, R-Texas, said in an interview Wednesday. “Obviously we ran out of time before the Christmas break and this week we've been occupied with [President Barack Obama's State of the Union speech] and the party retreats. But we're going to see where the votes are.” Senate Commerce Committee Chairman John Thune, R-S.D., an ITFA supporter and conferee on the HR-644 conference report, told reporters Tuesday he believes “if the customs conference report moves, ITFA will move” too (see 1601120070).
It's important to make sure “we’ve had an understanding” since ITFA's initial 1998 enactment “that we’re not going to tax the service of the Internet and that we want to encourage more people to have access to the Internet, not fewer," Thune told reporters. "Keeping the moratorium in place would prevent higher taxes both in the tax itself and also other telecommunications services that could become subject to taxes if that moratorium was lifted. We think it’s the right thing to do. And we intentionally put the four-year phase-out in there.” The permanent ITFA extension language included in HR-644 would allow states that were taxing Internet access services before Oct. 1, 1998, to phase out those taxes through June 2020. That phase-out period would allow states "plenty of time to adapt" to the changes, Thune said. "By that time, they will have succeeded in moving the MFA through the Congress. But in the near term, it won’t have any impact. They won’t face any type of budget shortfall this year.”
ITFA supporters in the private sector are already seeking support from 60 senators to override any ruling against inclusion of the ITFA language under the assumption that Alexander and Durbin's challenge will be successful. “It's pretty clear that [ITFA] wasn't included in earlier customs legislation in either the House or Senate, so it's pretty clear a point of order challenge would remove it,” an industry lobbyist told us. 'We're operating under the assumption that a challenge would be successful if Alexander and Durbin bring it up.” The House passed the Permanent ITFA (HR-235) in June but the Senate never considered the bill.
The ITFA Coalition is “confident that we're going to have at least the 60 votes needed” to override a successful point of order challenge, though “you never know how a roll call vote on something like this will fall until it happens,” Executive Director Jay Driscoll said. The Obama administration “desperately wants” HR-644 to pass because of its importance to the success of the Trans-Pacific Partnership and Senate Democrats who “want to help Obama get a win” on trade policy may be more willing to allow ITFA to remain in the bill if they see its removal “jeopardizes” HR-644's chances of passage, Driscoll said.
NetChoice CEO Steve DelBianco told us he's more skeptical of the chances for overriding a challenge to keeping ITFA in HR-644, though “it's a challenge worth reaching for.” Getting the 60 votes needed to overrule a challenge to the ITFA language will be “a tall order for the second half of January given that so many senators are focused on issues outside of Washington and given that there are a number of senators still on the Hill who supported the Marketplace Fairness Act during the last Congress,” DelBianco said. The FY 2016 omnibus spending bill passed in December included a one-year extension of ITFA, which likely “took away some of the pressure that would've been helpful in keeping ITFA as part of" HR-644, DelBianco said.