FLA. PLANNING SWEEPING TELECOM TAX REFORM IN FALL

Main focus of bill is to streamline and simplify how state and local taxes on wireline telephone, mobile phone, cable and satellite video services are administered, billed to customers and collected. State Sen. Jim Horne (R-Orange Park), bill sponsor, called it “win-win legislation that will benefit consumers, the industry and government.” State Rep. Stacy Ritter (D-Tamarac), who sponsored bill in House, said measure would consolidated 7 different state and local telecom, cable and satellite taxes into just 3 rates and would tax all telecom services at same rate regardless of technology used to deliver them, eliminating artificial tax advantages some types of providers have enjoyed.

Legislation was passed late Fri. in burst of last minute lawmaking at close of this year’s session. Supporters said it was end product of 3 years of work among industries, municipalities and state govt. that included passage last year of tax code changes that made this year’s telecom tax consolidation legally possible. Supporters said Fla. bill could serve as national model for other states that wanted to reform outdated telecom taxation.

Measure would combine state telecom sales and gross receipts taxes into single statewide 9.17% rate that would be billed as one line item. Local utility tax, telecom franchise tax, cable franchise tax and sales tax would be consolidated into single local rate for that municipality and billed as second line item. Local rates would range from 1.6% to 5.1%, depending on tax types and rate locality currently levied. State taxes on direct broadcast satellite services would be wrapped into single 13.7% rate listed as single line item on satellite services bill, with about 1/3 of collections from DBS tax to be returned to local govts. Rates were set to be revenue neutral for state and local govts. New taxes will show up on Oct. bills to replace current levies. Bill doesn’t affect state relay service tax or local E- 911 taxes, which will continue to be collected separately. Measure also doesn’t affect dial-up Internet access services.

Measure would broaden tax base by making interstate services subject to state and local tax and extending gross receipts taxation to include cable and satellite services. It also would simplify tax administration. Instead of filing hundreds of local tax returns, telecom, cable and satellite companies would file single tax return with Fla. Dept. of Revenue, which would take care of distributing local share of tax collections back to individual municipalities. Susan Langston, exec. dir. of Fla. Telecom Industry Assn., said legislation was “simply good public policy and the end result of strong political leadership and a strong desire from the industry to make positive changes so that everyone, including the consumer, benefits from the changes.”

Charles Dudley, counsel of Fla. Cable TV Assn., praised new legislation, saying it would bring competitive neutrality to Fla. telecom taxation. John Wayne Smith, legislative dir. of Fla. League of Cities, said measure would ensure stable tax base and would eliminate tax erosion due to new technologies. Sarah Bleakley, tax counsel of Fla. Assn. of Counties, said it would enable consumers to understand taxes on their bills, eliminate inequalities in tax treatment, broaden tax base.

New tax legislation wouldn’t solve all telecom taxation problems. It doesn’t address tax treatment for service bundles where taxable and nontaxable components can’t be separated, and doesn’t deal with tax jurisdiction issues that arise when private lines cross municipal boundaries. “We left those complex issues for next year,” Langston said. It also would result in higher telecom tax payments by some customers, particularly in rural areas where local telecom taxation was low or nonexistent.