Communications tax passes - Bill sent to governor would extend flat tax to satellite, Internet services
Source
Get ready to pay 5% more for your Satellite, Internet, and VOIP service!
Senators passed a bill last night that would apply a statewide flat-tax on communications and video services.
The provision that now heads to the governor would extend to currently levy-free systems such as satellite television, satellite radio and Internet telephone.
The change would replace the current communications tax structure, a mishmash set by Virginia's local governments.
Proponents say the 5 percent tax on communications services -- including wireless, landline and Internet-based telephone, as well as video -- would help bring relief to many taxpayers. Rural residents, however, may lose.
The bill was approved by the Senate, 25-11. The House also passed the measure.
It is sponsored by Del. Samuel A. Nixon Jr., R-Chesterfield, who cites figures from the Council on State Taxation showing that the average Virginia phone bill is 30 percent taxes, one of the highest in the country and more than twice the national average.
Virginia's current taxing structure is "based on a post-World War II model, put in place before [technologies] such as pagers, satellite TV and Internet," Nixon said. "Technology has advanced but the tax system has not."
A flat tax would level the playing field for all communications and video services, with Virginia consumers paying the same rate regardless of where they live, Nixon said.
Whether consumers save or lose money depends on their localities' tax rates, as well as the specific services used.
Generally, the bill's experts say, most residents should see an overall decrease in their communications-related taxes. For instance, a Richmond consumer using land-line and mobile phones and cable TV would save $9.65 each month in taxes, according to a study by the state telephone industry. If that consumer had satellite radio, the savings would decline to $9 a month.
"What we're doing here is working to tax the service, not the method of delivery," said Earl D. Bishop, executive vice president of the Virginia Telecommunications Industry Association.
But the bill, which would take effect Jan. 1, would include the now-untaxed services. Rural legislators argue that their constituents who rely on satellite dishes for video may face a new tax burden.
The telephone industry study found that residents in rural Bedford and Campbell counties who have a land-line and mobile phone and use satellite TV would pay a dollar or two more every month.
Bobby Wood, a western Hanover County resident, notes that satellite is his only option because there is no cable TV service to his country home.
"I understand that the bill is well-meaning in trying to streamline tax collection, but it is an unfair tax bill," Wood said yesterday. "It's nearly impossible to tax technology, as it is constantly changing and morphing."
Telecommunications companies argue that the current tax structure is unfair to phone firms and their customers, with consumers paying nearly as much in phone taxes as they do for service. Bishop said the bill would help decrease local governments' reliance on the declining use of land-line phones as more people switch to mobile or Internet-based phone.
The satellite industry opposes the measure, which DirecTV Inc. lobbyist Mark C. Pratt said is discriminatory to dish providers. He said they should not be asked to plug a tax revenue hole being made by the telephone industry.
"Our business model requires us to pay the federal government to have the satellites that we own in outer space beam signals into our customers' homes," Pratt said, noting that satellite technology does not use public property or roads to deploy its services, like telephone and cable TV companies do.
Sirius Satellite Radio Inc. sent e-mails to its subscribers yesterday stating that the bill is unfair to consumers because satellite radio service "is not competitive with these other services," such as phone and cable TV. Customers of XM Satellite Radio Holdings Inc. also would face the tax.
Yesterday, Sen. Jeannemarie Devolites Davis, R-Fairfax, warned that passing the bill would put Virginia "down the path of taxing content," and not the method by which services are delivered.
If the bill is enacted, the state would collect the telecommunications taxes and divvy the total across localities. Each share would be equal to the amount of taxes and fees municipalities currently collect.
But with that structure, noted Pratt, "there are an awful lot of jurisdictions that will not get back dollar-for-dollar the taxes that they pay."
Source
Get ready to pay 5% more for your Satellite, Internet, and VOIP service! Senators passed a bill last night that would apply a statewide flat-tax on communications and video services.
The provision that now heads to the governor would extend to currently levy-free systems such as satellite television, satellite radio and Internet telephone.
The change would replace the current communications tax structure, a mishmash set by Virginia's local governments.
Proponents say the 5 percent tax on communications services -- including wireless, landline and Internet-based telephone, as well as video -- would help bring relief to many taxpayers. Rural residents, however, may lose.
The bill was approved by the Senate, 25-11. The House also passed the measure.
It is sponsored by Del. Samuel A. Nixon Jr., R-Chesterfield, who cites figures from the Council on State Taxation showing that the average Virginia phone bill is 30 percent taxes, one of the highest in the country and more than twice the national average.
Virginia's current taxing structure is "based on a post-World War II model, put in place before [technologies] such as pagers, satellite TV and Internet," Nixon said. "Technology has advanced but the tax system has not."
A flat tax would level the playing field for all communications and video services, with Virginia consumers paying the same rate regardless of where they live, Nixon said.
Whether consumers save or lose money depends on their localities' tax rates, as well as the specific services used.
Generally, the bill's experts say, most residents should see an overall decrease in their communications-related taxes. For instance, a Richmond consumer using land-line and mobile phones and cable TV would save $9.65 each month in taxes, according to a study by the state telephone industry. If that consumer had satellite radio, the savings would decline to $9 a month.
"What we're doing here is working to tax the service, not the method of delivery," said Earl D. Bishop, executive vice president of the Virginia Telecommunications Industry Association.
But the bill, which would take effect Jan. 1, would include the now-untaxed services. Rural legislators argue that their constituents who rely on satellite dishes for video may face a new tax burden.
The telephone industry study found that residents in rural Bedford and Campbell counties who have a land-line and mobile phone and use satellite TV would pay a dollar or two more every month.
Bobby Wood, a western Hanover County resident, notes that satellite is his only option because there is no cable TV service to his country home.
"I understand that the bill is well-meaning in trying to streamline tax collection, but it is an unfair tax bill," Wood said yesterday. "It's nearly impossible to tax technology, as it is constantly changing and morphing."
Telecommunications companies argue that the current tax structure is unfair to phone firms and their customers, with consumers paying nearly as much in phone taxes as they do for service. Bishop said the bill would help decrease local governments' reliance on the declining use of land-line phones as more people switch to mobile or Internet-based phone.
The satellite industry opposes the measure, which DirecTV Inc. lobbyist Mark C. Pratt said is discriminatory to dish providers. He said they should not be asked to plug a tax revenue hole being made by the telephone industry.
"Our business model requires us to pay the federal government to have the satellites that we own in outer space beam signals into our customers' homes," Pratt said, noting that satellite technology does not use public property or roads to deploy its services, like telephone and cable TV companies do.
Sirius Satellite Radio Inc. sent e-mails to its subscribers yesterday stating that the bill is unfair to consumers because satellite radio service "is not competitive with these other services," such as phone and cable TV. Customers of XM Satellite Radio Holdings Inc. also would face the tax.
Yesterday, Sen. Jeannemarie Devolites Davis, R-Fairfax, warned that passing the bill would put Virginia "down the path of taxing content," and not the method by which services are delivered.
If the bill is enacted, the state would collect the telecommunications taxes and divvy the total across localities. Each share would be equal to the amount of taxes and fees municipalities currently collect.
But with that structure, noted Pratt, "there are an awful lot of jurisdictions that will not get back dollar-for-dollar the taxes that they pay."
