NLC SEEKS TO EXCLUDE SPECIFIC TELECOMMUNICATIONS TAX FROM MAIN STREET FAIRNESS ACT

by Lars Etzkorn

Last week, NLC called for an amendment to the Main Street Fairness Act (H.R. 5660) to explicitly exclude taxes and fees unique to communication services from the legislation, including right-of-way fees, franchise fees, 911 fees, gross receipt taxes, universal service funds, local utility user taxes, and excise taxes.

The bill, introduced in early July by Rep. Bill Delahunt (D-Mass.), would place Internet retailers on par with their brick-and-mortar counterparts regarding the collection of sales taxes. Internet retailers typically collect sales taxes only in states where they have a physical presence.

In a July 1 statement, Delahunt said the bill “will help state and local governments balance their budgets without raising any new taxes and will not cost the federal government a dime. States estimate that $18.6 billion in sales taxes will go uncollected in 2010 and, by 2012, the states will be losing at least $23 billion annually.

“From 2009-2012, this amounts to a loss of approximately $55 billion. In some cases, these revenue losses can comprise up to one half of a state's budget shortfall,” Delahunt said.

Upon introduction, NLC and other state and local government organizations expressed support for the bill in order to allow for the collection of taxes on all internet purchases.

However, following a recent meeting of the Telecommunications Task Force of the Streamline Sales Tax Governing Board, NLC grew concerned with assertions made by telecommunications industry representatives that H.R. 5660 could be interpreted to cover all state and locally imposed taxes on communications, rather than just sales and use taxes.

NLC did not support versions of the bill introduced in prior sessions specifically because they would have interfered with the ability of local governments to impose and collect communication specific taxes and fees on communications providers and services.

This article has been reprinted, with permission from the National League of Cities, from the August 16 edition of Nation’s Cities Weekly.

TML member cities may use the material herein for any purpose.
No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the
Texas Municipal League.

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