Flat-Tax Bill Heads to Fla. Governor

Author:
Updated:
Original:

Tax accounting should be simpler for Florida operators under the terms of a flat-tax bill headed for Gov. Jeb Bush's desk.

The new plan also changes the basis for telecommunications taxes in a way that applies them to satellite-TV and wireless carriers for the first time.

"This is as significant as a rewrite of the telecommunications act in our state," Florida Cable Telecommunication Association president Steve Wilkerson said.

The proposal will create a single tax on telecommunications, to be collected by the state, rather than by 67 counties and 380 municipalities in Florida.

"We'll no longer be subject to audits by consultants to justify their contingency fees. It will lessen our administrative costs," Wilkerson added.

The tax amount has yet to be set. The bill will establish a study that aims to determine a rate that provides local governments with the same amount of money obtained under the old regime. That provision was key to eliminating opposition from local-government lobbyists.

The new scheme taxes providers based on what they charge the consumer, as opposed to taxing an operator's gross revenue, which can include outside income such as payments from home shopping networks.

The tax will also be applied to satellite-TV providers and wireless carriers. But since the methodology is new, it could be challenged legally.

Kentucky operators floated a similar flat-tax proposal. It was part of a telecommunications-reform platform debated by the legislature, as was a new 6 percent tax on interstate long distance. But the flat tax was excised from the final budget bill.

A spokeswoman for the Kentucky cable trade group said the governor intends to recall the legislature for a special session sometime after the November election, at which time the cable industry intends to resurrect the flat-tax idea.

Experts said the Florida experience will help to determine whether flat taxation is a trend that should be replicated in other states.

"To rethink how a whole tax is levied is a laudable objective, but the devil is in the details," said John Seiver, a lawyer who deals with many cable-TV issues at Washington, D.C.-based Cole, Raywid & Braverman.

Cities can still levy other taxes in ways that put more of a burden on wired operators, he noted.

Gov. Bush has not signed the tax bill yet. But Wilkerson said he met with the governor, adding, "I don't have a care in the world" that he will sign the bill.

Related