The scene: A darkened, smoke-filled room not far from Capitol Hill.
"With all this growth in the computer industry, Ed, you'd think we'd be able to generate more tax revenues.""You're right, Senator," the aide replied. "It's just that they're becoming such a powerful force here in Utah."
"Well," the senator snorted, "it is hard to argue with the high wages the average IT worker is making. At least we get our piece of that."
"Yeah," the aide sighed. "It's too bad we can't find a way to make taxes in the computer field as pervasive as this Internet thing is getting. Why, just the other day . . . "
"That's it," the senator exclaimed, cutting off his aide's comment.
"What's it?" the aide asked.
"That's it - the Internet."
"The Internet?"
"Yes. Don't you see? We'll tax the Internet."
The aide paused as he eyed his boss warily. Unconsciously, he massaged his upper lip between his thumb and index finger.
"Do you think they'd stand for it?" the aide asked finally.
"If we did it right, they'd never even question it."
"C'mon," the senator said as he removed his oversized frame from behind the desk. "Let's go find Harry and see if we can put something together right away."
Slowly, and fairly quietly, a formidable movement is under way in Utah to impose a usage tax on all forms of telecommunications, including e-mail and use of the Internet.
Currently, the Legislature has authorized the taxation of in-state long-distance phone calls and local calls.
Now the powers that be are reaching out to touch the newest forms of communications in an effort to get a tax slice of this pie too.
Given that the Tax Commission has recently informed the Governor and the Legislature that the state is facing a tax shortfall due to miscalculations on the capital equipment replacement tax credit passed into law last year, this new tax movement seems to have a pretty good head of steam behind it.
However, I just learned this week of a counter proposal being proffered by Utah Information Technologies Association (and supported by the Utah Taxpayers Association) that at the very least is quite intriguing.
A tax-free zone. In simplest language, UITA (of which I am a member) proposes that Utah become a tax-free zone on the information superhighway.
This "freeport," as it were, would eliminate taxes of all types on any form of telecommunications. This would include all local and long-distance phone calls, fax machine usage, e-mail, "surfing" on the Internet, and other forms of communications not even invented yet.
By eliminating all taxes on telecommunications services, UITA's Peter Genereaux believes that Internet usage throughout the state would explode.
Additionally, he says, companies in the telecommunications and communications industries would flock to Utah, looking for the opportunity to operate with a lower cost of doing business.
The additional influx of businesses and employees would create such a rise of new tax revenues from other existing tax programs (withholding, property and corporate taxes, among others), that the overall effect would be tax revenue positive. In other words, a tax surplus for the state.
As we discussed this communications freeport idea during the lunch portion of a business luncheon on Wednesday, one of our associates at the table made what I thought was a very astute observation.
"It's like what Delaware did when they made their state a tax-free state for banks," said the CFO of a Salt Lake City-based, publicly traded company. "Soon, all the banks had major operations or headquarters based in Wil-ming-ton."
"As a result," someone else at the table chimed in, "Delaware more than made up for any lost revenue (because of the other tax revenue the state generated)."
Tax free, that's for me. Maybe it's because I watched most of the Wednesday night presidential debates. But today, I'm sick and tired of government in general and taxation specifically.
To me, the idea of taxing e-mail and access to the Internet is stupid. (Although, I must admit that it would seem very appealing to me were I in government.) I think the UITA proposal for establishing Utah as a telecommunications tax-free zone is great and something the Legislature should enact in its next session.
If you, my readers, agree with me, contact UITA via phone at (801) 568-3500, via fax at (801) 568-1072, via the Internet at (http://www.uita.org), or via mail at 6995 Union Park Center, Suite 490, Midvale, UT 84047, and let them know how you feel.
Or better yet, contact your local representative and senator and tell them to keep their tax hands off your Internet access.