New Hampshire Defeats Telephone Pole Tax Exemption
New Hampshire will see more legislation challenging telephone pole taxes, said Rep. John Burt (R-Hillsborough), who sponsored recently defeated HB-1305. The bill would have exempted phone companies from paying property taxes on the poles and initiated a study of how state utilities are taxed. The bill was defeated 161-133. The tax, which Burt called a “back door attempt to get more money,” stands.
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Some argue that pole tax would be double taxation because landline companies could pass it on to customers, as they do with the communications services tax, but opposition argued that the exemption would be unfair because electric companies have to pay taxes on electrical poles. “Electric companies collect electricity consumption tax which is done in the same way as communications services tax, but the electric company has always paid taxes on electricity poles,” said lawyer Cordell Johnston of the New Hampshire Municipal Association.
The tax on electrical poles differs because it affects nearly everyone, said co-sponsor Naida Kaen (D-Strafford). Because of federal tariffs, wireless carriers won’t be able to pass this tax onto customers, but wireline companies can. This means only citizens with landline phones will be affected, she said. Landline phones are more common for businesses, the elderly or people who can’t afford cellphones, and those groups can’t afford the added tax, Kaen said.
FairPoint Communications is the first to get permission to pass the charge on to customers, but other phone companies are expected to follow suit, said spokesman Jeffrey Nevins. The Public Utilities Commission has allowed FairPoint to charge customers 99 cents per line per month, for up to 25 lines, to cover the tax. The company will add the surcharge to customers’ bills starting in April.
The telco has already paid more than $3.2 million in telephone pole taxes this year and expects to have paid about $6.6 million by the end of the year, Nevins said. The amount charged to customers won’t be enough to cover the added costs, and is a “simplistic approach to a very complicated issue,” he said. Municipalities that opposed the bill saw the tax as a new revenue source rather than as a burden to consumers and to service providers who are already taxed on several different levels, he said.
Municipalities don’t see it as a new revenue source but rather as a way to widen the tax base, Johnston said. He said an exemption could have negative affects for taxpayers. “The bill would have provided tax exemption for one specific industry, so tax rates for all other property owners would increase.” Ken Weyler (R-Rockingham) said that’s not true and the telephone pole tax will not lower property taxes for anyone else.
New Hampshire had passed legislation allowing a temporary exemption for telephone poles in 1996, which was set to expire in 1999. The exemption was extended several times until 2010 extension efforts were voted down. The tax started in April 2011, and will continue unless similar legislation is passed, which Kaen said is unlikely. “Once this revenue starts flowing, I don’t think it will be able to be reversed,” she said.