Local Governments Turn Thumbs-Down Over Telecom Provisions in Streamline Tax Bills

WASHINGTON, Dec. 22 /U.S. Newswire/ -- National
organizations representing local governments today
voiced their opposition to federal legislation that
would essentially require them to sacrifice local
telecommunications taxes in return for the ability to
collect taxes on Internet sales.

"Congress is asking us to support a proposal that
would provide states and localities additional sales
tax revenue in exchange for preempting numerous local
telecommunications taxes," said Long Beach Mayor
Beverly O'Neill, president of the U.S. Conference of
Mayors (USCM). She further commented that "our loss in
telecommunications revenue will far outweigh the
little gain local governments may achieve in sales tax
revenue. Anyone can see this is not a balanced quid
pro quo and is, therefore, unacceptable."

S. 2152 and S. 2153, introduced by Sens. Mike Enzi
(R-Wyo.) and Byron Dorgan (D-N.D.), respectively,
would provide congressional support for the
Streamlined Sales and Use Tax Agreement (SSUTA), a
multi-state agreement that provides for the
simplification of sales and use tax laws in return for
allowing states and local governments to collect sales
taxes on all transactions, including sales over the
Internet.

Both pieces of legislation would also require states
and localities to simplify telecommunications taxes in
order to be authorized to collect the Internet sales
taxes. Local officials are concerned that the
legislation could open the door for the telecom
industry to push for an all-out ban on cities'
abilities to impose fees on a range of
telecommunication services, including rights-of-way
fees, per-line subscriber charges and franchise fees.
Revenues from these fees are a major source of funding
for critical local government services.

"Local governments strongly support working with
Congress and the telecommunications industry to
simplify telecommunications taxes so that all
providers can operate efficiently within local
jurisdictions," said James C. Hunt, president of the
National League of Cities (NLC) and Clarksburg, W.Va.,
councilman. "However, we cannot allow
telecommunications companies to dig up city streets
and disrupt the lives of our constituents -- and their
customers --without just compensation for their
actions."

Telecommunications companies as well as retailers will
reap significant financial benefits as a result of the
tax simplification effort. But local officials are
concerned that the telecom industry will push for a
complete exemption from any local telecommunications
taxes and are asking the question: Why give
telecommunications companies more benefits than anyone
else?

Representatives from USCM, NLC and the Government
Finance Officers Association (GFOA) have been working
closely with the telecommunications industry to find a
solution to the difficulties faced by the industry as
it responds to various tax rates and jurisdictional
issues. Although significant progress in reaching
agreement in several areas has been made, local
government officials are now concerned that they have
reached a point where the telecommunications companies
are refusing to compromise on language in these bills,
which is unacceptable.

Although officials commended the efforts by Sens. Enzi
and Dorgan to resolve this issue, they expressed
disappointment that a compromise could not be reached
prior to the end of this year's legislative session.

NLC's President Hunt said, "We regret having no choice
but to oppose these two bills. We applaud the senators
for their hard work on this legislation and appreciate
their willingness to broker negotiations on this
language. We look forward to supporting a compromise
bill that takes the concerns and finances of local
government into consideration in the New Year."

Collectively, the three organizations represent tens
of thousands of city and county officials throughout
the United States.

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