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Illinois OKs Simplified Telecom Tax

12/02/2001 7:00 PM Eastern

Add Illinois to the list of states looking to a "simplified" telecommunications tax to replace municipal rights-of-way fees and other use fees.

Currently, the state's telephone providers are subject to local fees for street occupation and municipal infrastructure protection. Those charges vary depending on whether a city employs a flat-fee structure or computes a per-foot fee on plant.

But if the bill passes, cities won't be responsible for setting and collecting fees after January of 2003 — those duties will shift to the Illinois Department of Revenue.

Anxious to replace its many assessors with just one, Illinois' telecommunications industry has backed the measure. And lawmakers, who are also eager to reduce telcos' complications, have moved the bill through the process quickly.

The measure passed the state Senate on Nov. 15; it's had several readings in the Assembly, where lawmakers are refining its language.

In the bill, lawmakers were careful to specify that the new, simplified tax is not to be counted as part of operators' gross revenues — an issue that's plagued the cable industry with respect to municipal franchise-fee assessments.

Operators and regulators have squared off in court over the practice of counting collected franchise fees as revenues. The cable industry has unsuccessfully argued that the practice collects a tax on a tax.

Under the new assessment, the fees are described as a tax for the privilege of originating or receiving signals in the city. The levy will not be assessed against leased-time channels or data-over-cable services. It will be passed through to consumers.

Cities with fewer than 500,000 residents would be permitted to charge a 6 percent levy; larger cities may charge up to 7 percent.

 

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