Florida Communications Tax Changes Sought
Operators in Florida are pushing a bill to update the state’s communications tax law. The bill (HB-809) would prevent governments from taxing new telecom services using what the industry claimed were outdated tax laws, industry officials said. However, the bill might result in millions of dollars in lost annual tax revenue, analysts from the state’s Department of Revenue claimed.
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The bill, sponsored by Republican Rep. James Grant, would prevent state and local governments from charging communications services taxes on digital goods and services like games, software or music and cloud services. It proposed an effective date of July 1. The bill doesn’t have an impact on telecom companies per se, a Verizon spokesman said. But it would benefit Florida consumers by clarifying that Florida’s “high-rate communications service tax” doesn’t apply when service providers as well as companies that aren’t communications service providers sell digital goods or digital services, he said.
The state hasn’t updated its communications service tax law in more than a decade, despite changes in technology and services, said Charles Dudley, general counsel for the Florida Cable Telecom Association. “You need to have bright lines” between what is taxable and what isn’t, he said. But the state’s Department of Revenue analysts estimated that the proposal could drain more than $430 million annually in tax revenue. They worried that the bill would allow companies more freedom to bundle taxable items with non-taxable items into one package with a single price but calculate the taxes based on the based only on the undisclosed prices of the taxable item.
Telecom companies are already allowed to bundle Internet services (exempt from tax) with other services, said Dudley. That didn’t lead to a huge drop in tax revenue, he said. Additionally, because of the audit system, companies won’t be incentivized to minimize the price for taxable services, he said. The bill was passed by the Finance & Tax Committee on a voice vote. The next hearing is scheduled for Tuesday before the Energy & Utilities Subcommittee.