In an effort to prevent media companies from reclassifying themselves right off the tax rolls, the Massachusetts Municipal Association is promoting a bill to reform taxes on pole use in municipal rights-of-way.
The bill (working its way through committee) was apparently prompted the ruling in a state case brought by RCN Corp.
The Supreme Judicial Court ruled that the bundled services provider fit the legal definition of a “telephone and telegraph company.” That definition allowed RCN to take advantage of a property tax exemption throughout the state and set a precedent that could extend the exemption to other providers, such as cable companies, when they launch telephone service.
The bill has already had the effect of unifying the cable, telephone and wireless industries, noted Paul Cianelli, president of the New England Cable & Telecommunications Association.
Cable, Verizon Communications Inc., wireless providers and the Massachusetts High Tech Council believe the bill creates a new, substantial tax on cable and traditional telephone systems, while other providers, such as direct-broadcast satellite, are left in a more favorable position.
“They’re not closing a loophole, they’re creating a brand-new tax,” Cianelli said.
“We’re vigorously opposing it.”
There’s a reason there has been no taxes on wires in the public rights-of-way, he said.
The legislature wanted to encourage construction of advanced technologies and cable was in the forefront of innovation, Cianelli said.
“Municipalities are looking for new revenue without taking a long-term view,” he added.
As the law is currently written, tax laws are not uniformly applied. Electric wires are taxed, but telephone and data lines are not.
Poles are taxed depending on whether or not they’ve been placed in the right-of-way, and whether the user is a corporation of a limited liability partnership.
If a pole is co-owned, it can only be taxed for the electric company’s share.
WHAT’S IN THE BILL
To protect and possibly even generate more local revenue, the municipal lobby, supported by the Massachusetts Association of Assessing Officers, has drafted a bill.
It seeks to prevent telecommunications business from gaining tax-free status simply by changing its classification with the state to a telephone company, or changing itself organizationally to a corporation, which is exempt.
According to the MMA, the bill would also end outdated exemptions for telephone-company machinery and for poles and wires in public rights-of-way.
The group estimates the bill could provide $140 million annually to cities and towns by adding telecom property to the tax rolls.
The MMA is stumping for support by obtaining resolutions from city councils and seeking endorsements from editorial boards.
Resolutions in support of the bill have been adopted by city councils in Easthampton, Everett, New Bedford, Revere and Worcester; and selectmen in Sheffield and Plympton.