Workers at Avalon, a massive mixed-use development in Alpharetta, recently laid fiber optic cable that will connect every residence, retail shop, office space and hotel with “gigabit” Internet service that is many times faster than traditional broadband service.

New Georgia tax could cover phone, TV and internet streaming services

Georgia lawmakers are proposing a new tax on phone lines, TV subscriptions and maybe even internet streaming services such as Netflix and Amazon Prime Video.

The telecommunications tax, along with existing sales taxes on equipment, would help pay for the cost of building high-speed internet lines to the 16 percent of Georgians who live in rural areas that currently lack internet access. The tax could raise roughly $200 million a year in new revenue.

State representatives on the House Rural Development Council unanimously supported the broadband plan on Dec. 13. Details of the tax will be negotiated during next year’s legislative session.

The Georgia House of Representatives Rural Development Council unanimously approved suggestions meant to boost the economy in rural areas at the Old Capitol Building in Milledgeville, Ga., on Wednesday, Dec. 13, 2017. Those seated in the center are, from left, Reps. Patty Bentley, Sam Watson, Jay Powell and Terry England. MARK NIESSE / MARK.NIESSE@AJC.COM The meeting was led by Rep. Jay Powell and Rep. Terry England, the co-chairmen of the council. MARK NIESSE / MARK.NIESSE@AJC.COM
Photo: The Atlanta Journal-Constitution

The telecommunications tax would cover phone and TV services, including internet phones and satellite TV, which currently aren’t taxed. Existing franchise fees on communication services would be eliminated and replaced by the telecommunications tax. Proceeds from the tax would be split between state and local governments.

“This will level the playing field,” said Clint Mueller, a lobbyist for Association County Commissioners of Georgia, which advocates for county governments. “We really need to get away from fees and sales taxes applying to bits and pieces of technology.”

It’s unclear whether the telecommunications tax, which could be set at a rate around 5 percent, would cover streaming services.

Internet service providers are exempt from taxation under a 1998 federal law, the Internet Tax Freedom Act.

But states such as Florida and Pennsylvania have already begun to levy taxes on video streaming services.

“It’s something we’ll have to look at as we go through the process,” said Rep. Jay Powell, R-Camilla, the chairman of the tax-writing House Ways and Means Committee. “Our goal is to broaden the base to cover technologies … that aren’t being taxed because they didn’t exist” when the state created its tax structure decades ago.

Georgia Power currently spends $50 million per month on the project. In March 2017, Vogtle’s lead contractor, Westinghouse Electric, filed for bankruptcy. The project was already three years behind schedule and more than $3 billion over budget. Georgia Power’s Paul Bowers argues the project presents “long-term benefits to customers.” Critics have fought against Vogtle's expansion for years, citing cost and safety concerns. Cost and schedule estimates presented by Georgia Power may determine the project's fate. Plant Vogtle is one of Georgia's two nuclear power plants.

Amazon declined to comment Thursday, and Netflix didn’t immediately respond to a message.

Cable companies are in favor of a telecommunications tax, said Georgia Cable Association lobbyist Stephen Loftin during a May 23 presentation to the House Rural Development Council. The Georgia Cable Association’s members include Comcast, Charter Communications and Cox Communications, the cable and broadband internet subsidiary of Cox Enterprises, which also owns The Atlanta Journal-Constitution.

“We continue to support something like that, that’s not based on the technology, it’s based on the service,” Loftin said.

Money raised from the telecommunications tax would be dedicated to subsidizing internet companies’ construction costs.

Georgia legislators have proposed creating a “reverse auction,” where the state would essentially auction off government funding for internet lines in low-population areas. The internet service provider that needed the smallest subsidy to make internet construction financially feasible would win the funding.

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