Testimony in Support of Closing the Telecom Tax Loophole

Testimony In Support of Closing the Telecom Tax Loophole
Chairwoman Creem, Chairman Binienda and members of the Joint Committee on Revenue

From: Deirdre Cummings, Legislative Director

RE: In Support of Closing the Telecom Tax Loophole, HB 3075

MASSPIRG is a non profit and non partisan public interested organization with 50,000 across the state. We are here today, testifying in support of HB 3075, filed by Representative Petruccelli, and other bills which would level the playing field by closing the “Telecom Tax Loophole”. MASSPIRG has long been an advocate of transparency, accountability, and fairness in government and the private sector. Closing this loophole would eliminate a long outdated “tax break” for telecom companies and instill public confidence in our tax laws.

This hearing comes just days before the deadline to file our taxes, and each year at about this time, Bay Staters have an opportunity to reflect about taxes and how our tax dollars get spent. Some may use the occasion to complain about their taxes or government, others may object that public structures like schools, roads, and health inspections need more public funds than they receive. Whatever your perspective, Tax Day and our tax bills are far more palatable when we feel confident in the tax system; that there is inherent fairness in the system; and no one group or individual gets unintended or unreasonable tax breaks.

The telecom loophole was first adopted in 1915 as part of a government initiative to bring telephones to homes when the industry consisted of one phone company, Bell Telephone, with publicly established profit margins and a heavily regulated market. This loophole initially exempted telephone companies from paying ‘rent’ for the use of telephone poles. Today – over 90 years later – utility companies like NSTAR are required to pay property taxes on above-ground poles and wires, while telephone companies like Verizon are exempted.

The telecom loophole totals approximately $78 million that is not going to vital local services and more importantly puts pressure on cities and towns to raise the tax burden for others and undermines the public confidence in a fair tax system. Paying taxes are far more palatable when the tax code is fair and does not allow for any one business or industry to get an unfair advantage by not requiring them to pay the same tax others must pay. Businesses should thrive based on their efficiency and innovation, not their opportunities for leveraging or maintaining ‘creative’ tax breaks.

This loophole should be closed. It serves no modern public purpose, prevents more efficient use of public space, totals approximately $78 million dollars and forces local assessors to waste taxpayer dollars chasing after questionable claims by companies who are both utilities and telecoms.