Awful Internet Laws are Closer Than You Think

Congress may have gone home to campaign, but that hasn’t stopped bad internet bills and regulations from threatening to stifle innovation and limit online choices.

To highlight some of the gravest – and most imminent – legislative and regulatory threats to e-commerce, NetChoice today unveiled a special edition of the Internet Advocates Watchlist for Ugly Laws (iAWFUL).

This latest iAWFUL focuses on measures that pose an imminent threat to the internet in 2012, ones that lawmakers want to jam through legislatures, or rules already in effect and in dire need of repeal and redress.

Earning top (dis)honors in the year-end iAWFUL are a cluster of federal bills set to impose new, unique tax burdens to internet and catalog retailers.

State tax collectors have been trying – and failing – for a decade to get Congress to let states impose their taxes on businesses outside their jurisdiction. And now, despite failing miserably in their efforts to create a simplified collection system that eases burdens on online sellers, lawmakers in Congress figure they have the political firepower to push this measure through in its current, broken state.

Since its creation in 2009, the iAWFUL list has highlighted how certain laws and regulations can be awful for the innovative services that internet users love.

Fueled by big-box stores competing with Amazon, the so-called “Main Street Fairness Act” and its companions are likely to be on lawmakers’ agendas when they get back for the lame-duck session after the election.

If internet advocates in Washington aren’t vigilant in the waning days of 2012, we may all find ourselves with a regressive and deeply flawed sales tax system in 2013.

The Fall 2012 iAWFUL runner up features outdated laws being used to squash competition, stifle innovation, and increase costs to consumers in cities like Boston, Las Vegas, New York, San Francisco, Seattle, Tampa, and Washington.

New disruptive businesses models from companies like Uber, AirBNB, and TrueCar are generating opposition from traditional entrenched businesses.  The worst part is that entrenched businesses are twisting laws designed to protect consumers to prevent them from enjoying the benefits of these new business models.

Coming in at number three on the list is an overreaching tax grab by the State of Pennsylvania that could crush Pennsylvania websites and online publishers’ ability to earn advertising revenue.

Going further than any state before it, the Pennsylvania Department of Revenue (DoR) classified any business that places an online ad in the state as having a physical presence in PA and forcing them to pay state sales tax. The change – issued by fiat by the DoR – is already in effect and in need of legal challenge.

At number four is an effort by the Federal Trade Commission to rewrite children’s privacy regulations in a way that could devastate innovation in online content and services for young people. The rulemaking is in progress now, but internet advocates are making a final push to restrain this rewrite.

Fifth on the list are a series of state measures that would expressly contradict the wishes of users regarding what happens to their social networking data when they die. It’s a uniquely 21st Century problem that states are trying to resolve in a decidedly 20th Century manner.

Last on the list is a measure by the DC government to mutilate tax rules to levy its double-digit hotel occupancy tax – not just on room rates – but on online service fees too.  This is yet another example of cities and states threatening travel agents and online travel sites with the wrong tax rate in the wrong jurisdiction – and asking consumers to pay for it..

Since its creation in 2009, the iAWFUL list has highlighted how certain laws and regulations can be awful for the innovative services that internet users love.  But in several cases we were able to see how exposing these rules can affect real change and protect the internet from (i)awful consequences.

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