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News and comments on community broadband networks, the communities deploying them and the technologies that support them. Published by Denise Frey and Al Bonnyman.

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Friday, September 19, 2003


Cable and telco lobbyists craft federal bill to shaft cities out of billions

Jim Baller just forwarded me an urgent memo from the National Association of Telecommunications Officers and Advisors (NATOA)

  • "The Internet Tax Moratorium, originally intended to prevent the taxation of Internet transactions, is set to expire on October 31, 2003, absent Congressional action. H.R. 49 and S. 150 are the result of the desire to extend and expand upon the existing moratoria. These pieces of legislation have been heavily influenced by cable and telecom industry lobbyists who have helped expand the definition -- now this legislation could exempt all telecommunications providers from local government taxes, including franchise fees for cable and telephone."
  • Specifically, H.R. 49 and S. 150 extend the moratorium on Internet taxes permanently and expand the ban on Internet access taxes to include telecommunications services to the extent “such services are used to provide Internet access.”
  • The language of H.R. 49 and the proposed language of S. 150 threatens two traditional, yet separate and distinct, municipal powers –
    • the ability to impose telecommunications taxes or to apply local utility taxes to the provision of telecommunications services and,
    • the ability of local governments to impose franchise fees as “rent” for use of public rights-of-way on companies, such as telecommunications and cable service providers that use public property for private profit.

  • "The result of the proposed legislation will be the loss of billions of dollars in telecommunications fees and taxes for local governments across the country. With respect to H.R. 49, the Congressional Budget Office stated that the bill was an unfunded mandate and will cost state and local governments at least $80 to $120 million, and further that they 'cannot estimate the magnitude of timing of any additional impact at this time.' The Multi-State Tax Commission has indicated that losses may be as high as $4 to $8 billion."

For more information, see the NATOA web site.

Regardless of how you might feel about the moratorium on Internet sales taxes or taxes on basic Internet access, sneaking in language to eliminate the current decades-old system of franchise fees paid by cable and telephone companies would further hurt local governments struggling to fund expanded Homeland Security needs in the face of already reduced tax revenues.


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