Hawaii on verge of phasing out Internet access tax

You might not have known it, but if you pay for Internet service, you’re also paying a tax.

But that is likely going away, thanks to Congress. On Thursday, lawmakers on Capitol Hill voted to permanently bar state and local governments from taxing access to the Internet.

If the approved bill becomes law, seven states, including Hawaii, would have to phase out their taxes by summer 2020.

The Center on Budget and Policy Priorities reports that Hawaii could lose nearly $20 million each year in tax revenue.

The state Department of Taxation was not able to confirm that number, but said it has another five years to see the delayed effect.

Meanwhile, consumer advocates say no one should have to pay a tax for the Internet.

“Anything that costs the consumer additional money to have access to the Internet, that I would fight tooth and nail,” said Scott Foster, Hawaii Advocates for Consumer Rights.

Since 1998, Congress has passed a series of bills temporarily prohibiting state and local governments from taxing online access, but states including Hawaii, have been able to do so.

“I wouldn’t expect any impact on the local providers of Internet, because this is a tax that comes on top of whatever they charge,” said David Hunter, a professor at the University of Hawaii at Manoa Shidler College of Business.

State Sen. Sam Slom, R, Hawaii Kai, Diamond Head, says he’s been opposed to the tax for years.

“Any tax that can be stopped, I’m in favor of,” Slom said.

Slom said he is more concerned about over-taxation of Hawaii’s residents, rather than making up the lost revenue.

“Would people be able to get their money back that they have already paid on this tax?” KHON2 asked.

“Probably not, like so many other things, but be grateful if you can stop the tax and not make it be any bigger,” Slom said.

President Barack Obama is expected to sign the bill.

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