Telecom companies agree that tax reform is needed to boost competition, but wireless companies, in particular, are struggling to find consensus with Utah municipalities on what form the alterations should take.
At a Tuesday meeting of the state's Competition in Telecommunications Industry Task Force, representatives of wireless companies and the Utah League of Cities and Towns expressed differing viewpoints on the companies' proposal to change the tax structure.
The wireless companies are suggesting several changes, including one that would eliminate a $1 monthly cell phone fee imposed by some Utah municipalities and replace it with a fee for telecom companies using public rights of way.
Proposals from others, they said, simply combine taxes to hurt wireless companies.
"I think you'll find that this proposal offers the maximum amount of tax simplification, uniformity, modernization and competitiveness that the state of Utah and its cities and towns can responsibly afford," said John Cmelak, director of tax policy for Verizon Wireless.
"Also, what's very important to think about is that this revenue-neutral proposal represents the most citizen-friendly tax reform alternative currently under consideration."
Scott Mackey, a Vermont economist representing several wireless companies, agreed.
"We don't think that now that most of the vestiges of regulated industry have gone away that there continues to be justification for singling telecommunications out for specific taxes that other industries don't pay," he said.
"I think Utah is maybe uniquely poised to hit a home run in this area, at least from the industry perspective. I think there is money on the table to do this in a way that broadens the tax base and lowers overall rates . . . and is revenue-neutral."
Paul Morris, a West Valley City attorney and chairman of the league's task force on telecommunications, said cities are working with Qwest Communications International Inc. and MCI to prepare a joint tax-reform proposal for the legislative group.
But the wireless companies' proposal "doesn't make a lot of sense," he said, because it repeals one tax, the $1 monthly fee, and replaces it with a sales-tax increase on long-distance calls for all telecom companies.
"Instead of simplifying the sales tax, it seems to us it complicates it," Morris said.
Qwest and the wireless companies, meanwhile, agree that sales and use taxes on long-distance calls could be used to finance an exemption for the sales tax on telecom equipment — much like an existing exemption for manufacturers in Utah.
The proposed legislation from Qwest would produce some extra revenue, which would be used to replace existing fees and surcharges that fund the poison control center and devices for the hearing- and speech-impaired.
The result is a revenue-neutral proposal, according to Doug Hurst, Qwest's director of state and local tax research.
"The concept behind it is that it's not to be a tax increase or welfare for corporations. It is to be truly simplification and equality," he said.
While Qwest is calling for the charges for the poison control center and the devices for hearing- and speech-impaired to be eliminated, it is not seeking elimination of those programs themselves.
But Jeff Fox, utility analyst for Crossroads Urban Center, said he is concerned that a repeal "is certainly anti-hearing-impaired and not customer-friendly."
Mackey said the wireless companies are open to ideas on reform. "We want to support anything that moves us from the status quo to an easier-to-administer, fairer tax policy," he said.
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