Presentation on theme: "Kissinger & Fellman, P.C. www.kandf.com1 Communications Taxation Reform Are Local Governments in the Picture? NATOA Regional Workshop St. Louis, Missouri."— Presentation transcript:
Kissinger & Fellman, P.C. www.kandf.com1 Communications Taxation Reform Are Local Governments in the Picture? NATOA Regional Workshop St. Louis, Missouri April 29, 2005 Kenneth S. Fellman
Kissinger & Fellman, P.C. www.kandf.com2 ITFA Postscript State and Local Government allies in Congress Short, and not so sweet message: “we can’t keep saving your bacon” State and local governments, and industry, need to resolve this
Kissinger & Fellman, P.C. www.kandf.com3 NGA Proposal High level meetings with governors, state legislators, local elected officials and industry leaders Find compromise for communications tax reform legislation this session
Kissinger & Fellman, P.C. www.kandf.com4 The Participants Government: NGA, NLC, NaCO, USCM, NCSL, CSG (2 from each) Industry: SBC, Sprint, Time Warner Cable, Knology, AT&T, Comcast, Level 3, T- Mobile, AOL, Verizon Communications, Verizon Wireless, BellSouth, Nextel, Qwest, Cingular, Broadband Service Providers Association
Kissinger & Fellman, P.C. www.kandf.com5 Before the First Meeting State and Local exec directors and staff meet to determine key principles Recognized potential damage if State and Local governments appeared divided
Kissinger & Fellman, P.C. www.kandf.com6 Before the First Meeting Key State and Local Principles Technology neutrality Outcome revenue neutral for state AND local government Federal government should not preempt state and local taxing authority Respect state and local role in preserving public interest obligations Transition time will be necessary
Kissinger & Fellman, P.C. www.kandf.com7 First Meeting: 12/15/04 Industry Principles presented: Tax rate for all taxes on communications industry should not exceed tax rate applied to general business Special Purpose Funding Fees should be limited to funding important social goals (i.e., universal service, E-911) or to costs caused by provision of communications services (i.e., ROW fees)
Kissinger & Fellman, P.C. www.kandf.com8 First Meeting: 12/15/04 Industry Principles (cont.) Dramatically simplify collection, reporting and auditing of state and local transaction taxes on communications services Streamlined Sales Tax Agreement should include transaction taxes on communications services
Kissinger & Fellman, P.C. www.kandf.com9 Post 12/15 meeting Staff working groups Tax vs. fee working group Technology neutrality working group Centralized collection working group Data collection working group
Kissinger & Fellman, P.C. www.kandf.com10 2 nd Meeting: 3/1/05 Update on principals’ positions Update on working group status Insufficient time set for meeting Too much posturing from principals
Kissinger & Fellman, P.C. www.kandf.com11 Largest Hurdles to Overcome ROW fees – are they on or off the table? Centralized collection – is it theoretically possible that it could ever work for local government? Revenue neutrality – at state level or local government level? What does industry mean when they say they want same level of taxation as general business?
Kissinger & Fellman, P.C. www.kandf.com12 Post 3/1 Meeting Smaller group of staff meeting Goal to develop general principles Each organization to then provide its specifics to give definition to the general principals Compare specifics and see how far apart we really are
Kissinger & Fellman, P.C. www.kandf.com13 Framework for Moving Forward Temporarily suspend reality – imagine no existing regulatory framework No such thing as “information,” “telecommunications” or “cable” services How do we want the regulatory framework to look if we were writing it on a clean slate?
Kissinger & Fellman, P.C. www.kandf.com14 Principles on the Table State and local tax policy should not influence consumers’ selection or use of one specific communications technology or service over another Competing services that are equivalent or viewed as viable substitutes by consumers ( “functionally equivalent services”) should be treated on a non- discriminatory tax basis by state and local governments regardless of technologies used to deliver them State and local taxation should not advantage one provider over another provider of a functionally equivalent service
Kissinger & Fellman, P.C. www.kandf.com15 Principles on the Table Apply special purpose obligations (universal service, 911) on non- discriminatory basis between providers of functionally equivalent services. Revenues should be used only for the purposes for which they are collected Apply charges for use of PROW on competitively neutral and nondiscriminatory basis among providers of communication services
Kissinger & Fellman, P.C. www.kandf.com16 Principles on the Table Authority to raise revenues to provide for public interest is vital to state and local governments and should be preserved Reforms should strive to simplify collection, reporting and auditing of state and local taxes on communications services A time of transition should be incorporated for all parties to adjust to any agreed upon communications reform
Kissinger & Fellman, P.C. www.kandf.com17 Principles on the Table Taxes on communications services, property, and providers should reflect the competitive nature of the industry and its proportionate share of taxes relative to the general business community Reform should allow for solutions that are revenue neutral at the state and local government levels Tax obligations should not vary based on the level of a provider’s presence in a taxing jurisdiction
Kissinger & Fellman, P.C. www.kandf.com18 Obstacles to Success Industry principals not at the table NCSL/Industry – attempts to tie communications tax reform to streamlined sales tax legislation Question as to whether industry can come to consensus
Kissinger & Fellman, P.C. www.kandf.com19 Local Government Goal Stay at the table Compromises fine, within framework of key principles If the process is unsuccessful, it will not be because local governments refused to negotiate
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