Dear
Legislator:
On behalf of the National Taxpayers
Union’s (NTU’s) nearly 8,300 members in Georgia, I urge you to refrain from any
action that would add to the telecommunications tax burden or unfairly
discriminate against particular types of telecommunications services as the
General Assembly considers proposals from the Special Council on Tax Reform and
Fairness for All Georgians. Fairer, lower taxes for all participants in
this sector should be the overarching goal.
Telecommunications make up an essential part of daily life in
Georgia and will be a key element in restoring and building out Georgia’s
economy. These services
should be taxed less, not more, for the benefit of all businesses and
consumers. Whether they subscribe to cable or satellite television, wireless or
wireline, their choices should not be determined by onerous government tax
policies.
Most would agree that the state’s
antiquated telecommunications tax regime needs to be modernized to reflect new
technologies and usage trends. Furthermore, some argue that a new tax regime is
warranted in order to level the business playing field between various
industries.
Although tax modernization can be a worthy endeavor in
itself (certainly, no one seriously argues that the state should consider
taxing telegraph services), it should not serve as an excuse for raising
revenues or discriminating against a particular industry. Regrettably,
government has for too long used the tax code and its regulatory power to pick
winners, while consumers forced to pay higher prices are the ultimate losers.
For example, franchise fees for cable television were
supposedly instituted to reflect a cost of doing business – in this case, using
public rights of way for cable wires. Unfortunately, the lopsided and
frequently inequitable fee negotiation process has led to many instances where
cable providers are paying too much to local governments. It has also led to satellite television service providers, who do
not utilize public rights of way, being targeted with taxes and fees whose
incidence does not fit their business model. Similarly, wireless phone service is now
the 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’s
bill. Meanwhile, wireline service is still largely governed by taxes and rules
imposed during the age of rotary dialing.
Clearly, the path towards a more modern telecommunications
tax system is difficult. But it is not impossible. Economists from across the
political spectrum believe that the best structure for taxation is built upon a
broad base and low, stable rates – a structure designed to meet the basic goal
of raising revenue, not to influence public behavior. Thus, the way to achieve
tax fairness and neutrality for telecommunications in Georgia is through reducing
and reforming taxes for telecommunications service, not through raising taxes
or imposing new ones on other types of businesses. A case in point is the
Council’s recommendation to afford telecommunications equipment the same tax
treatment as other businesses’ equipment investments. Assuming Georgia’s tax
law will continue to reflect a sales and use tax exemption for inputs utilized
to provide goods or services (a common way of avoiding double taxation), it
makes perfect sense for the provision to apply broadly. Further steps at reform
will require equally thoughtful deliberation, and the final package may need to
include elements that the Council had not considered.
We commend you for the discussions you have held on proposals from the
Special Council’s blueprint. We firmly believe that the time is now for Georgia
to embark on the path to a simpler, fairer, and pro-growth tax system that
benefits all Georgians. To that end, we stand ready to work with you in developing a
telecommunications reform plan that reduces taxes, respects and accurately
accounts for costs of various business models, removes regulatory barriers, and
treats every market entrant fairly.
Sincerely,
Andrew Moylan
Vice President of
Government Affairs
Letter
