IN the marketplace, wireless phone and broadband Internet providers are in pitched competition with telephone companies offering traditional landline service.
But this legislative session, the three competing industries joined in support of House Bill 1971, a broad rewrite of the state’s telecommunications tax code. Written in 1983, the code exempts landlines from sales tax but requires it be collected for calls made on wireless and Voice over Internet Protocol (VoIP) service.
As the industry has said in legislative testimony, HB 1971 provides a more rational and fair approach. It extends a tax paying for Enhanced 911 service to prepaid cellphones for this first time, and ensures subsidies for rural telephone service and for deaf customers.
Most important, it eliminates a potential $1 billion state liability. In 2011, a Thurston County Superior Court judge ruled that wireless and Internet service qualify for the landline exemption. If applied retroactively, as is standard in tax cases, the state faces a whopping bill. The industry hasn’t pressed this advantage, instead opting to start a two-year negotiation, which produced HB 1971.
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HB 1971 simply ends the landline exemption, resulting in about $83 million in tax revenue. Co-sponsored by Reps. Reuven Carlyle, D-Seattle, and Terry Nealey, R-Dayton, HB 1971 passed out of the House in April with a bipartisan supermajority of 74-22.
And it has been sitting idle in the Senate ever since. Sen. Doug Erickson, R-Ferndale, chair of the Senate telecommunications committee, didn’t give it a hearing. Neither did Sen. Andy Hill, R-Redmond, who chairs the Senate Ways and Means Committee.
The apparent problem is that HB 1971 is seen by some anti-tax purists in the Senate Republican caucus simply as a tax increase.
That ignores the fact that HB 1971 is a reasonable response to a court ruling. It is good public policy, hammered out by competing industries.
The Senate should shelve ideological purity and quickly pass HB 1971.