What is the 7% Tax?

The City of Salem currently charges a 7% tax on internet services — but only to some providers — making it more expensive for companies to expand high-speed internet access such as fiber. Meanwhile, two internet providers in Salem are completely exempt from these fees.

This creates an unfair, uneven market that limits competition, slows innovation, and keeps prices high.

Without change, Salem residents and businesses will continue paying more for fewer choices, while neighboring communities benefit from faster, more affordable internet service.

We’re calling on city leaders to eliminate this outdated tax and establish a level playing field for all providers.

What is the 7% Tax?

SALEM RESIDENTS ARE READY FOR AN UPGRADE

What's at Stake.

Access to affordable, reliable internet is no longer optional — it’s essential for daily life, economic growth, education, healthcare, and public safety. But right now, inconsistent and unfair tax policies are holding Oregon back.

If we don’t fix this broken system, here’s what’s at risk:

  • Higher Costs — The tax is passed down to consumers, driving up monthly bills for households, schools, and businesses.
  • Fewer Choices — New providers avoid Salem, leaving residents stuck with limited and often outdated service options.
  • Slower Service — High-speed fiber networks struggle to expand under an uneven system, delaying access to modern infrastructure.
  • Widening Inequality — Communities that lack access to affordable, reliable internet are left behind in school, work, and opportunity.

As a result, many Salem households and businesses are stuck with overpriced, underperforming internet, while other cities benefit from faster, more affordable options.

Fair competition means better service and lower prices. It’s time for Salem to modernize its approach — and put people first.

FAQs

The City of Salem requires fiber-optic internet providers to pay a 7% tax on gross revenues for the right to operate within city limits. This tax applies to data and internet services, unlike the tax applied to other providers.

Unlike other cable and traditional phone providers who only pay on cable TV services, Fiber-optic and internet service providers must pay 7% on all internet services.

This means that fiber companies are taxed at a higher rate than other internet providers, creating an unfair competitive advantage for companies that do not invest in fiber expansion.

The 7% tax discourages fiber companies from entering the Salem market, which results in:

  • Higher costs for residents and businesses due to lack of competition.
  • Fewer choices—residents are limited to legacy internet providers.
  • Slower expansion of fiber networks, meaning reduced access to high-speed, reliable internet.

No. The revenue collected from the tax is not designated for essential services like roads, public safety, or education. Instead, it is a general revenue charge that disproportionately targets certain internet providers. In fact, because the 7% tax is applied unevenly, it has discouraged new providers from entering the market — slowing internet expansion and limiting potential revenue the City could have collected.

The 7% tax only applies to certain internet providers, while others are exempt or taxed at a lower rate. This creates an uneven playing field where some companies are forced to pay significantly more, making it difficult for new providers to compete.

Additionally, this policy contradicts federal and state protections against taxing internet access, which are meant to encourage investment in broadband infrastructure.

Yes, but they are controversial. Cities like Eugene, North Plains, and The Dalles have adopted similar taxes, which have discouraged new investment in fiber networks. These policies often face legal challenges for violating federal regulations and discouraging broadband expansion.

Reliable, high-speed internet is essential for business operations. The 7% tax:

  • Raises internet costs, especially for businesses that rely on fast connections.
  • Prevents competition, limiting options for business owners.
  • Slows broadband expansion, making it harder for businesses to access modern infrastructure.

If the 7% tax is eliminated:

  • More fiber-optic providers will enter the Salem market.
  • Residents and businesses will have access to faster, more reliable, and more affordable internet.
  • Competition will drive better service and lower prices for consumers.

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