Subj: Internet Access Taxes: Perspectives of IPI: Center for Technology Freedom From: Bartlett Cleland Institute for Policy Innovation To: Internet Caucus Advisory Committee Access Taxes The Internet Tax Freedom Act prohibits states from imposing new taxes on the Internet, but taxes that were already in effect were permitted to remain. One type of tax that several states had turned to was the "access tax," which taxes access to the Internet by imposing a tax on the fees charged by Internet service providers such as America Online. For example, according to the National Conference of State Legislatures, by March 1998, 10 states, Washington D.C. and several local governments were taxing Internet access. However, several of those states have since eliminated or suspended the access tax. Utah Gov. Michael Leavitt has devised a variation of the access tax. As the demand for high-speed Internet access explodes, cable companies are expanding to meet that demand. In 1999, the state's Rights of Way Task Force recommended a one-time, $500-per-mile charge when cable firms lay cable along the right-of-way strips next to interstate highways. That tax would eventually be passed on to cable users, thus indirectly taxing high-speed Internet access. While access taxes are fair, in that they tax everyone at the same rate, they have fallen out of favor with many people because they, in effect, impose a tax on information, and the vast majority of people who use the Internet do so for information. As a result, there seems to be a growing consensus that access taxes, while fair, are not a good policy option for raising revenue.