Mass. Property-Tax Revision Would Soak Subs

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Massachusetts consumers could face a substantial increase in their cable and other telecommunications bills if the state’s legislature passes a property-tax revision, business leaders testified yesterday.

Telephone companies and cable operators have partnered in an attempt to fight off House Bill 2408, which would apply property taxes to infrastructure such as poles, underground conduits and wires. Cities — especially Boston — have spearheaded the proposal, because their revenues have declined as telephone companies accelerated depreciation of equipment, or transferred ownership titles out of state, to avoid taxes.

The law is needed to close “loopholes,” according to municipal officials.

In a public hearing on the bill June 21, businesses leaders said their tax-saving tactics were triggered by a January ruling of the state’s Supreme Judicial Court, which did away with tax exemptions on telecommunications companies. As a result, cities such as Boston hit those companies with huge tax increases.

The companies had to find a way to cut their tax burden or they would have had to pass through massive rate hikes, they argued.

Massachusetts customers already pay $198 million a year in state sales taxes on communications services, according to the New England Cable Telecommunications Association. The property-tax proposal would raise that burden as much as $2 on some cable bills and as much as 15 % for some local telephone customers, business leaders testified.

The proposal is a new tax, not a loophole-closing proposal, they said.

House leaders have not set a date for a floor vote for the proposal.

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