“Tax Loopholes” House Bill 3075

An Act Relative to the Taxation of Telecommunication Companies HB3075 proposes amending various provisions relative to the taxation of telephone and telegraph companies; provides for the valuation of poles, wires, underground conduits and pipes of said companies by the assessors of the municipalities where they are located; directs the commissioner of revenue to assess said taxes; provides for the valuation and assessment of other property owned by said companies by municipal assessors; repeals provisions exempting said companies from local taxation.

Proponents of the bill argue that the current law exempting telephone company property, such as poles, from the personal property tax are out of date and moreover, are preventing cities and towns from collecting much needed revenue. One example, using Verizon Wireless, estimated that it’s the difference between being taxed on property worth $4.1 million in fiscal year 2007 versus $492.8 million in fiscal year 2008. Proponents also note that a law dating back to 1915 creates difficulties for cities and towns trying to tax a very modern telecom industry.

Opponents note that the increased cost to telecommunications companies will simply be transferred to consumers in addition to citing the already burdensome cost of doing business in Massachusetts. They also voice concerns over a reduction in investments by telecommunication companies in Massachusetts, which could leave underserved and unserved areas without modern amenities such as broadband and wireless services. Opponents also note that only large cities would benefit from the increase in taxes.

This has become a hot-button issue in a time when most cities and towns are struggling for new sources of revenue and phrases like “closing tax loopholes” make the business community cringe. HB3075 remains before the Joint Committee on Revenue (JRV) and has had no action since April 2007.

Please note that HB3749, the Municipal Partnership Act, as proposed by the Governor, also includes a similar proposal.

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