DearLegislator:
On behalf of the National TaxpayersUnion’s (NTU’s) nearly 8,300 members in Georgia, I urge you to refrain from anyaction that would add to the telecommunications tax burden or unfairlydiscriminate against particular types of telecommunications services as theGeneral Assembly considers proposals from the Special Council on Tax Reform andFairness for All Georgians. Fairer, lower taxes for all participants inthis sector should be the overarching goal.
Telecommunications make up an essential part of daily life inGeorgia and will be a key element in restoring and building out Georgia’seconomy. These servicesshould be taxed less, not more, for the benefit of all businesses andconsumers. Whether they subscribe to cable or satellite television, wireless orwireline, their choices should not be determined by onerous government taxpolicies.
Most would agree that the state’santiquated telecommunications tax regime needs to be modernized to reflect newtechnologies and usage trends. Furthermore, some argue that a new tax regime iswarranted in order to level the business playing field between variousindustries.
Although tax modernization can be a worthy endeavor initself (certainly, no one seriously argues that the state should considertaxing telegraph services), it should not serve as an excuse for raisingrevenues or discriminating against a particular industry. Regrettably,government has for too long used the tax code and its regulatory power to pickwinners, while consumers forced to pay higher prices are the ultimate losers.
For example, franchise fees for cable television weresupposedly instituted to reflect a cost of doing business – in this case, usingpublic rights of way for cable wires. Unfortunately, the lopsided andfrequently inequitable fee negotiation process has led to many instances wherecable providers are paying too much to local governments. It has also led to satellite television service providers, who donot utilize public rights of way, being targeted with taxes and fees whoseincidence does not fit their business model. Similarly, wireless phone service is nowthe target of a host of taxes and fees, such as per-line and “E-911” charges –so much so that overall they now account for almost a quarter of a subscriber’sbill. Meanwhile, wireline service is still largely governed by taxes and rulesimposed during the age of rotary dialing.
Clearly, the path towards a more modern telecommunicationstax system is difficult. But it is not impossible. Economists from across thepolitical spectrum believe that the best structure for taxation is built upon abroad base and low, stable rates – a structure designed to meet the basic goalof raising revenue, not to influence public behavior. Thus, the way to achievetax fairness and neutrality for telecommunications in Georgia is through reducingand reforming taxes for telecommunications service, not through raising taxesor imposing new ones on other types of businesses. A case in point is theCouncil’s recommendation to afford telecommunications equipment the same taxtreatment as other businesses’ equipment investments. Assuming Georgia’s taxlaw will continue to reflect a sales and use tax exemption for inputs utilizedto provide goods or services (a common way of avoiding double taxation), itmakes perfect sense for the provision to apply broadly. Further steps at reformwill require equally thoughtful deliberation, and the final package may need toinclude elements that the Council had not considered.
We commend you for the discussions you have held on proposals from theSpecial Council’s blueprint. We firmly believe that the time is now for Georgiato embark on the path to a simpler, fairer, and pro-growth tax system thatbenefits all Georgians. To that end, we stand ready to work with you in developing atelecommunications reform plan that reduces taxes, respects and accuratelyaccounts for costs of various business models, removes regulatory barriers, andtreats every market entrant fairly.
Sincerely,
Andrew Moylan
Vice President ofGovernment Affairs