2005 ADOPTED RESOLUTIONS
TRANSPORTATION AND COMMUNICATIONS

URGING PROTECTION OF LOCAL TAXING AUTHORITY IN THE MODERNIZATION OF THE NATION’S COMMUNICATIONS TAX LAWS

WHEREAS, state and local taxation of communications services began during a time when land-line phone services were provided by a monopoly, and evolved to current times when numerous landline phone companies compete not only amongst themselves but with wireless phone companies as well as with other forms of communications such as instant messaging, e-mail and Voice over Internet Protocol (VIOP); and

WHEREAS, innovations and the convergence of communications technologies have significantly changed the market place, causing service providers to expand and offer a variety of services, thereby blurring the distinction between telephone and Internet services, between cable, wireless and satellite, and between long distance and local services; and

WHEREAS, federal communications laws, Federal Communications Commission regulatory actions and court rulings have emerged since 1934 in a disjointed manner, in some cases preempting state and local taxes on certain services and in others imposing different limits on the ability state and local governments to tax land-line phone services, wireless phone services, cable and satellite video services; and

WHEREAS, federal limits have therefore made it impossible for state and local governments to apply their taxes equitably to all functionally equivalent communications service providers; and

WHEREAS, to facilitate a discussion on modernizing state and local communications taxes between state and local governments and representatives from the communications industry, Virginia Governor Mark Warner convened a meeting of government and industry leaders in the fall of 2004 to examine concerns form both sides and develop recommendations for changing federal communications laws to modernize state and local communications taxes; and

WHEREAS, the Conference of Mayors appointed a communications task force in the fall of 2004 to examine local communications tax issues and make recommendations to protect local interest as Congress considers rewriting federal communications tax laws; and

WHEREAS, the Conference communications task force has held several meetings and adopted recommendations to protect the interest of local governments; and key leaders from the group have meet on two occasions with Governor Warner and other government and industry leaders to share local concerns and recommendations,

NOW, THEREFORE, BE IT RESOLVED, that The U.S. Conference of Mayors urges Congress and the Bush Administration to follow the principles adopted by the Conference communications task force in developing legislation to modernize federal communications tax laws. The principles are as follows:

  • The authority to raise revenues to provide for the public interest is vital to state and local governments and should be preserved.
  • Competing communication services that are either equivalent or viewed as viable substitutes by consumers (hereinafter “functionally equivalent services” should be treated on a non-discriminatory basis for taxes or special purpose fees, rent and costs, if any by state and local governments, regardless of technologies used to deliver them.
  • A time of transition should be incorporated for all parties to adjust to any agreed upon communications tax reform.
  • State and local taxes on communications services, should reflect major recent changes in this industry, which is rapidly evolving.
  • State and local communications tax policy should allow for consumer selection of service providers and technology.
  • State and local taxation should not advantage one communications service provider over another provider of a functionally equivalent service.
  • Reforms should strive to simplify the collection, reporting and auditing of state and local taxes on communications services.
  • Reform should allow for solutions that preserve state and local revenue.
  • Tax obligations should not be based on the provider’s presence in a taxing jurisdiction.
  • Special purpose obligations, including but not limited to universal service, public, education and government access (PEG) and 911, should be applied on a nondiscriminatory basis between providers of functionally equivalent services.
  • Rental payments for the use and occupancy of the public rights-of-way should be applied on a competitively neutral and nondiscriminatory basis among providers of communication services that use the public rights-ofway.( Those service providers using the public rights of way would be subject to the fair market value for the rights conveyed for that use.)
  • Non-rental costs including maintenance incurred by state and local governments associated with communications companies’ provision of services should be borne by that company.
  • ©2005 The U.S. Conference of Mayors
    Tom Cochran, Executive Director
    1620 Eye Street, NW, Washington, DC 20006
    Tel. 202.293.7330 ~ Fax 202.293.2352
    info@usmayors.org