Florida Telcos, Ops Seek Tax Reform

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Telecommunications companies in Florida are pushing for legislation that would consolidate taxes and apply them more evenly.

If approved, the state would create two tax formulas: a state communications tax and a local tax. Cable and satellite TV, wireless and wireline phones would be affected. Only Internet-service providers would be exempt, due to a federal pre-emption extended this month.

"Internet is the only black hole in all this," said Charles Dudley, outside chief counsel for the Florida Cable Telecommunications Association.

This effort was prompted by the state's telephone providers four years ago. BellSouth Corp. and others want to replace hundreds of regional and local taxes and rates with a single, yearly payment to the state. Tallahasee authorities would redistribute the payment to cities.

The proposal was doomed at that time, because cities worried that their take would diminish and consumers feared rate hikes.

The telcos realized more than a year ago "if we go to war with local governments, we won't make it," Dudley said. Instead, industry lobbyists sat down with local representatives and became involved in the draft process.

Companies believe the current version will safeguard cities'funding levels. To protect consumers, lobbyists want to cap the new taxes.

Though telecommunications companies worked as much as possible to eliminate opposition before signing on Sen. Jim Horne (R-Orange Park) as sponsor, passage won't be a cakewalk. A recent simplification scheme in Kentucky stalled out, as legislators were loath to approve even a "new tax" that was new only in name.

New taxes are always a hot-button issue in Florida, Dudley noted. But term limits kick in this year, so half the legislature will not return. Most legislators appear to agree a state tax is a good idea, and appreciate the unified industry support, Dudley said.

But some counties, arguing that they may lose compensation, could put up a fight. Cable also wants clarity on global issues. Will operators get credit against state or local fees for public, educational and government-access-channel support, or for wiring government and school buildings for free?

Telcos argue telecommunications companies should be treated equally. Currently, telephone providers may pay a franchise or right-of-way fee and an initial permit fee. All providers should pay a similar amount, they argue.

"We're trying to keep those issues from blowing up a bill," Dudley said.

Two versions of the legislation are working their way through each house. The Senate bill emerged from the finance committee and about 50 amendments were tacked on last week. A full vote could be two weeks away.

The bill could set a precedent and companies in other states are watching. Florida officials fielded calls from companies in Colorado and New York that were seeking information about the bill's wording and the legislative strategy.

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