Lobbying on Online Sales Tax Legislation Won't Grow as Bills Stall, Lobbyists Say
The number of entities lobbying Congress on online sales tax legislation is likely to continue to either decrease slightly or remain static through the end of 2016, amid growing perceptions that bills like the Marketplace Fairness Act (S-698) and the Remote Transactions Parity Act (HR-2775) aren't likely to move in view of the rapidly closing legislative window, two internet commerce lobbyists said in interviews. Meanwhile, the number of entities lobbying Congress on the Internet Assigned Numbers Authority transition may either rise or fall sharply in Q3 depending on how the debate over whether to allow the transition to proceed progresses in the coming months, stakeholders told us.
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Google continued to lead all information and communications technology firms in lobbying expenditures during Q2, though it reduced spending by more than 8 percent to $4.24 million. More than a dozen other top firms also reduced lobbying expenditures in Q2 from the same period in 2015, including Microsoft, which decreased spending to just over $2 million. Amazon was among the few firms to report an increase in spending in Q2, up 39 percent to $3 million. Oracle also increased lobbying spending by 11 percent to $1.92 million. Tech firms lobbied during Q2 on a range of issues, including the ongoing encryption debate and intellectual property issues (see 1607200067).
Lobbying on both HR-2775 and S-698 decreased in each successive quarter between Q2 2015 and the same period this year, according to Senate lobbying records. The number of entities lobbying on the bills stood at 104 in Q2, down from 123 during the same period in 2015 and down slightly from the 110 entities that lobbied on the bills during Q1. A range of industries has been lobbying for and against the bills, but a significant plurality of lobbying has come from local and state governments. Thirty-nine city and county governments lobbied on HR-2775 and S-698 during Q2, as did state governments in California and Nevada. Governments’ lobbying on online sales taxes was also down year-over year during the quarter, as 48 city and county governments were lobbying on the bills during Q2 2015.
The decrease in lobbying numbers on HR-2775 and S-698 is “very slight” but shows existing perceptions (see 1606030050) that the status quo in Capitol Hill’s consideration of online sales tax legislation has remained unchanged over the past six months are beginning to become entrenched, an industry lobbyist told us. Senate Majority Leader Mitch McConnell, R-Ky., promised in February to allow Senate consideration of the controversial S-698 this year as part of a deal to prevent a floor fight over the inclusion of the Permanent Internet Tax Freedom Act’s language in the now-enacted Trade Facilitation and Trade Enforcement Act (see 1602100061 and 1602110056). House Judiciary Committee Chairman Bob Goodlatte, R-Va., has been continuing to work on an alternative “origin sourcing” bill that could break the stalemate but the rapidly closing legislative calendar makes it difficult for such a bill to gain momentum even during a lame duck session, another lobbyist said.
Future lobbying on the IANA transition is going to be largely dependent on how Hill debate on the transition evolves in the coming weeks, said Phil Corwin, principal of e-commerce and IP law consultancy Virtualaw. The number of entities lobbying on the IANA transition increased slightly in Q2 to 19, up from 13 during the same period a year earlier. The number of entities lobbying on general issues related to ICANN decreased slightly from 30 in Q2 2015 to 25 during the same period this year. The issue figured into the Republican Party's 2016 platform (see 1607110057 and 1607130024) and was featured prominently in the Internet Association's policy platform. TechFreedom President Berin Szoka praised the GOP in a Thursday blog post for including the IANA transition in its platform. But he raised concerns that the platform language "simplifies the issue and uses such hyperbole that it is impossible to tell whether anyone involved actually understands the issue."
The transition is very important to stakeholders within the internet governance space but “in the constellation of tech sector issues it’s relatively secondary,” Corwin said. Any change in the number of entities lobbying on the issue is likely to be largely dependent “on what happens in September,” he said. Any legislative action aimed at either a compromise on the transition or an outright delay will be compressed into the three-week period between Congress’ scheduled return from recess Sept. 6 and the current Sept. 30 end-date of NTIA’s current contract with ICANN to administer the IANA functions, Corwin said. An extension of the IANA contract will mean that lobbying on the issue will be likely to continue past Sept. 30, but “at some point, the issue will become moot one way or the other,” he said.