Taxing telecommunications in Virginia

Guest post by Duront Walton, the Executive Director of the Virginia Telecommunications Industry Association

For the past few years, the Virginia Telecommunications Industry Association has worked with the General Assembly to make telecommunications taxes transparent and user friendly to the Virginia taxpayer. Simply put, that means you should be able to understand what the taxes you see on your phone and cable bills are actually for. This was a very complicated process that took years of the General Assembly, localities and industry working together to reform the system. Ultimately, we successfully cleaned-up and standardized the telecommunications taxes, both statewide and locally, and modernized them to be technology-neutral so the same mess could be avoided in the future. The result really sets Virginia apart from most states that continue to deal with a messy patchwork of taxes.

One tax on your home and wireless phone service is the E-911 tax. This funds 911 call centers around the state and ensures that regardless whether you call from home or from a cell phone anywhere in the state you get connected to the nearest 911 call center.

An E-911 tax that funds 911 call centers makes sense. What doesn’t make sense is a hidden tax in the Virginia Senate budget proposal that raises the E-911 tax by a whopping 24% then diverts the revenues to fund a separate and unrelated program.

As an industry that has endured our share of economic challenges recently, we are not unsympathetic to the challenges the fiscal Commonwealth faces. However, we do believe that even in tough times Virginia’s government should be transparent in its effort to address budget shortfalls. That is why our organization so strongly opposes proposals to raise the E-911 tax by creating a surcharge on all wireless and wire line telecommunications consumers for a purpose that is unrelated to the current fee and the program it supports. As we view it, this new tax uses our member companies to collect new tax revenue, as though it is related to providing emergency service, and then betrays the trust of the citizens of Virginia by diverting it to a program that does not support the E-911 system at all.

A little background on this:

This is a union bill that firefighters have pushed each year to increase state contributions to the “line of duty fund.” The fund, in and of itself, is a very worthy project that makes payments to the families of first responders who are killed or injured in the line of duty. But those covered under the Line of Duty statute include everyone from game wardens to state hazmat teams to the Virginia Marine Resources Commission. All of these are noble and important offices, but there is hardly a connection between their job and a 911 communications infrastructure.

No one takes issue with the merits of the fund. Senator Fred Quayle (R-Chesapeake) has introduced a bill that adds this tax onto home security systems each of the past four years. It’s failed every year because the General Assembly didn’t feel there was enough of a nexus between security systems and the fund to link the tax. Quayle refused to carry the bill again for a 5th year. As a tip of the hat to his union buddies, Governor Kaine included the tax in his budget, placed it on all Virginians who have a home or cell phone, and then promptly left town.

The House of Delegates stripped the language out of their proposed budget and killed several bills that proposed to implement this through a change in statute. The Virginia Senate, on the other hand, left it in their budget.

All Virginians understand the grave situation that faces the Commonwealth, but if it is the will of the Governor and the General Assembly to create a new tax and a specific revenue stream to support the Line of Duty Program then they should do so honestly and openly. Governor Kaine contended that there were no gimmicks in the budget that he left. This item is just that – a budget gimmick that betrays the taxpayers trust.

Taxpayers, businesses and government are all in the same boat navigating the same rough economic waters. We all need to be open about the problems we face and honest about the solutions no matter how difficult. If a budget passes with this hidden tax increase in it, I fear we are beginning a long journey backwards.

This tax is nothing more than a shell game and Virginians deserve better.

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