Georgia Legislators to Consider Telecommunications Tax to Pay for Rural Broadband in 2018

The telecommunications tax, along with existing sales taxes on network equipment, would help pay for the cost of building high-speed Internet lines to the 16 percent of Georgians who live in rural areas that currently lack Internet access.

by Mark Niesse, The Atlanta Journal-Constitution / December 22, 2017

(TNS) — Georgia lawmakers are proposing a new tax on phone lines, TV subscriptions and maybe even Internet streaming services such as Netflix and Amazon Prime Video.

The telecommunications tax, along with existing sales taxes, would help pay for the cost of building high-speed Internet lines to the 16 percent of Georgians who live in rural areas that currently lack Internet access. The tax could raise roughly $200 million a year in new revenue.

State representatives on the House Rural Development Council unanimously supported the broadband plan on Dec. 13. Details of the tax will be negotiated during next year’s legislative session.

The telecommunications tax would cover phone and TV services, including Internet phones and satellite TV, which currently aren’t taxed. Existing franchise fees on communication services would be eliminated and replaced by the telecommunications tax. Proceeds from the tax would be split between state and local governments.

“This will level the playing field,” said Clint Mueller, a lobbyist for Association County Commissioners of Georgia, which advocates for county governments. “We really need to get away from fees and sales taxes applying to bits and pieces of technology.”

It’s unclear whether the telecommunications tax, which could be set at a rate around 5 percent, would cover streaming services.

Internet service providers are exempt from taxation under a 1998 federal law, the Internet Tax Freedom Act.

But states such as Florida and Pennsylvania have already begun to levy taxes on video streaming services.

“It’s something we’ll have to look at as we go through the process,” said Rep. Jay Powell, R-Camilla, the chairman of the tax-writing House Ways and Means Committee. “Our goal is to broaden the base to cover technologies … that aren’t being taxed because they didn’t exist” when the state created its tax structure decades ago.

Amazon declined to comment Thursday, and Netflix didn’t immediately respond to a message.

Cable companies are in favor of a telecommunications tax, said Georgia Cable Association lobbyist Stephen Loftin during a May 23 presentation to the House Rural Development Council. The Georgia Cable Association’s members include Comcast, Charter Communications and Cox Communications, the cable and broadband Internet subsidiary of Cox Enterprises, which also owns The Atlanta Journal-Constitution.

“We continue to support something like that, that’s not based on the technology, it’s based on the service,” Loftin said.

Money raised from the telecommunications tax would be dedicated to subsidizing Internet companies’ construction costs.

Georgia legislators have proposed creating a “reverse auction,” where the state would essentially auction off government funding for Internet lines in low-population areas. The Internet service provider that needed the smallest subsidy to make Internet construction financially feasible would win the funding.

©2017 The Atlanta Journal-Constitution (Atlanta, Ga.) Distributed by Tribune Content Agency, LLC.