CAL. COMMISSION SIDESTEPS TELECOM, TV, DBS TAX ISSUES
The Cal. Commission on Tax Policy in the New Economy decided not to act on several telecom, TV and DBS tax issues, in a recently issued report. The report did recommend unspecified tougher measures to enforce collection of existing taxes on Internet purchases.
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“Telecommunications taxes were discussed at several Commission hearings,” the report said, but the issue is “very complex” and “Commissioners did not formally vote on telecommunications tax proposals… They felt they did not have the time and resources to delve further into the issues.”
The telecom proposal examined suggested: “Combine all state and local taxes, fees and surcharges charged on providers of electronic communications devices (e.g., telephone companies, cellular companies, cable television companies, satellite companies) and their customers into one statewide tax on customers’ communications bills. This statewide tax would be collected by distributors and allocated by the State Board of Equalization to state and local jurisdictions currently receiving revenue from existing taxes, fees and surcharges on a revenue-neutral basis.” Another suggestion was to dedicate proceeds “to statewide infrastructure, including accelerating the deployment of broadband.”
“Old-paradigm taxes, fees and surcharges on communications providers and consumers designed to meet the revenue needs of the state and its political subdivisions… are premised on monopolies’ offering discreet services with stable technology,” the report said. “They, therefore, cannot insulate the state’s revenue base from technological change, competitive choice or regulatory flux, and call for consideration of structural change. Florida is an example of a state that has already put a simplified communications tax in place, but its experience demonstrates that structural reform is a time-consuming process… Moreover, any such change cannot take place at the expense of important state policies such as safety (i.e., 911 support) and universal service.” The commission also issued no recommendation on a proposed 8% tax on satellite TV service to roughly correspond to cable levels.
On e-commerce issues, “some commissioners suggested that better enforcement of the California use tax could substitute for joining the Streamlined Sales Tax Project (SSTP),” the report said: “The Board of Equalization is limited, however, in the measures it can take to collect the use tax unless federal law is changed.” The commission cautioned that the “additional administrative burden to increase compliance may not be cost-effective with respect to the amount of revenue collected.” But it said noncompliance meant “remote sales have a cost advantage over Main Street sales due to a differential tax treatment.”
Although Oct. enactment of a law making Cal. a voting SSTP member “made it unnecessary for the Commission to vote on this proposal, the Commissioners all agreed that further study is necessary to determine whether California should change its sales and use tax laws to conform to the Streamlined Sales and Use Tax Agreement. Analysts from the Board of Equalization have advised the Commission that such changes would require a major overhaul.” The report lists pros and cons of full SSTP participation.
The commission chmn. is William Rosendahl, Cal. Cable Telecom Assn. chmn. and Adelphia vp-political affairs. Among the other 8 voting members are Warner Bros. Online Business Development Vp Sean Burton, Sacramento lobbyist Lenny Goldberg and Cisco Tax Vp Glen Rossman.