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URGING PROTECTION OF LOCAL TAXING AUTHORITY IN THE MODERNIZATION
OF THE NATION’S COMMUNICATIONS TAX LAWS
WHEREAS, state and local taxation of communications services
began during a time when land-line phone services were provided
by a monopoly, and evolved to current times when numerous landline
phone companies compete not only amongst themselves but
with wireless phone companies as well as with other forms of
communications such as instant messaging, e-mail and Voice over
Internet Protocol (VIOP); and
WHEREAS, innovations and the convergence of communications
technologies have significantly changed the market place,
causing service providers to expand and offer a variety of
services, thereby blurring the distinction between telephone and
Internet services, between cable, wireless and satellite, and
between long distance and local services; and
WHEREAS, federal communications laws, Federal Communications
Commission regulatory actions and court rulings have emerged
since 1934 in a disjointed manner, in some cases preempting
state and local taxes on certain services and in others imposing
different limits on the ability state and local governments to
tax land-line phone services, wireless phone services, cable and
satellite video services; and
WHEREAS, federal limits have therefore made it impossible for
state and local governments to apply their taxes equitably to
all functionally equivalent communications service providers;
and
WHEREAS, to facilitate a discussion on modernizing state and
local communications taxes between state and local governments
and representatives from the communications industry, Virginia
Governor Mark Warner convened a meeting of government and
industry leaders in the fall of 2004 to examine concerns form
both sides and develop recommendations for changing federal
communications laws to modernize state and local communications
taxes; and
WHEREAS, the Conference of Mayors appointed a communications
task force in the fall of 2004 to examine local communications
tax issues and make recommendations to protect local interest as
Congress considers rewriting federal communications tax laws;
and
WHEREAS, the Conference communications task force has held
several meetings and adopted recommendations to protect the
interest of local governments; and key leaders from the group
have meet on two occasions with Governor Warner and other
government and industry leaders to share local concerns and
recommendations,
NOW, THEREFORE, BE IT RESOLVED, that The U.S. Conference of
Mayors urges Congress and the Bush Administration to follow the
principles adopted by the Conference communications task force
in developing legislation to modernize federal communications
tax laws. The principles are as follows:
The authority to raise revenues to provide for the public
interest is vital to state and local governments and
should be preserved.
Competing communication services that are either
equivalent or viewed as viable substitutes by consumers
(hereinafter “functionally equivalent services” should be
treated on a non-discriminatory basis for taxes or
special purpose fees, rent and costs, if any by state and
local governments, regardless of technologies used to
deliver them.
A time of transition should be incorporated for all
parties to adjust to any agreed upon communications tax
reform.
State and local taxes on communications services, should
reflect major recent changes in this industry, which is
rapidly evolving.
State and local communications tax policy should allow
for consumer selection of service providers and
technology.
State and local taxation should not advantage one
communications service provider over another provider of
a functionally equivalent service.
Reforms should strive to simplify the collection,
reporting and auditing of state and local taxes on
communications services.
Reform should allow for solutions that preserve state and
local revenue.
Tax obligations should not be based on the provider’s
presence in a taxing jurisdiction.
Special purpose obligations, including but not limited to
universal service, public, education and government
access (PEG) and 911, should be applied on a
nondiscriminatory basis between providers of functionally
equivalent services.
Rental payments for the use and occupancy of the public
rights-of-way should be applied on a competitively
neutral and nondiscriminatory basis among providers of
communication services that use the public rights-ofway.(
Those service providers using the public rights of
way would be subject to the fair market value for the
rights conveyed for that use.)
Non-rental costs including maintenance incurred by state
and local governments associated with communications
companies’ provision of services should be borne by that
company.
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