Sample Letter addressing Impact on Local Government Tax Revenue

Date

Honorable
United States Senate
Washington, D.C. 20510

RE: Opposition to S. 150

Dear [Senator]:

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As the _____________ of _______________, _______, [job title, city/county, state] I would like to convey our concerns over the current draft of S. 150, the "Internet Tax Non-discrimination Act" that is before the Senate. The companion bill, HR 49, passed the House last week.

Because the language of HR 49 (as reported to the Senate) and S. 150 could be interpreted to exempt all telecommunications providers from local government taxes, as well as franchise fees for cable and telephone (because they provide access to the Internet), we are greatly concerned how the loss of this revenue could impact ____________________ [City/County] in a time when costs have increased and revenues have decreased.

We ask for two changes to S. 150 as drafted, in order to preserve local governments' historical right to collect fees for use of the right-of-way and to protect existing revenue streams that make possible the services we provide our citizens and your constituents.

First, add language similar to the following:

SEC. 5 No Impact on Rights of Way Fees or Franchise Fees
Nothing in the Internet Tax Freedom Act shall prevent the imposition or collection of any fees or charges for use of a state or local government's right-of-way, taxes in lieu of right-of-way fees, or sales and use taxes on telecommunications services. Nothing shall affect or void the terms of any existing franchise as authorized by Sections 253, 621 or 622 of the Communications Act of 1934, as amended.

Second, remove "except to the extent such services are used to provide Internet access" from the telecommunications services carve-out to the definition of "Internet access service". This seemingly innocuous language swallows the exception entirely because all telecommunications services may be used to access the Internet.

While the intent of this bill appears to aid the consumer, we are concerned that passage of the bill as written would ultimately prove costly to our citizens through additional local taxes to replace the loss of revenue needed to support the essential services our citizens require. In fact, the "Internet Tax Non-Discrimination Act of 2003," as drafted, will have the effect of eliminating revenues we have already projected for next year's budget. Because tax rates will already be set, the only way to make up the shortfall will be a reduction in services [if applicable: and a loss of jobs through a reduction in force of municipal workers]. The Congressional Budget Office (CBO) forecasts the current draft will cost state and local governments $80 to $120 million without the losses attributable to the broadened definition of "Internet access service" discussed above, and with the broadened definition, the Multistate Tax Commission estimates that state and local governments will lose $4 billion to $8.75 billion annually by 2006.

Thank you for your consideration of this matter and your continued support of our communities.

Sincerely,

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