StateImpact
11:33 am
Wed February 1, 2012

Why The Telephone Pole Tax Matters

We'll admit it: The telephone pole property tax sounds like a dry topic for the 2012 Legislative session at first glance.

And at second glance, for that matter.

But fortunately for us, John Toole of the Eagle-Tribune took a third look, rustled up some sources, facts, and stats, and managed to make the story not only interesting, but also compelling. We highly recommend you check out his article.

But if you don't have time (or need a bit of convincing), here's the backstory in a nutshell: Until two years ago, it was state law that municipalities couldn't charge telecoms property taxes for phone poles. When the legislature lifted the exemption, the telecoms objected on the grounds that customers' bills would go up. (In fact, the Public Utilities Commission allowed Fairpoint Communications to at least temporarily issue a surcharge on phone bills to off-set the newly reinstated property tax.)

In short, the phone company wants its tax-free phone poles back.

And they might just get them if HB 1305 passes the legislature.

So unsurprisingly, the main players in this tax drama are the municipalities, by way of the New Hampshire Municipal Association, and the telecoms. Among the town and city arguments for the taxes, Toole writes:

"Members [of the Municipal Association] dismiss the proposed exemption — pending before the Legislature — as a corporate subsidy underwritten by other property taxpayers.

"It is not the duty of municipalities and local taxpayers to rescue the telephone companies," the New Hampshire Municipal Association said in a statement...

The Legislature let the tax break lapse two years ago amid criticism the phone companies had an unfair advantage over other taxpayers.

No other business gets such a tax break, they all pay property taxes, the municipal association said."

Meanwhile, Toole notes the telecom argument:

"'People have short memories,' Pat McHugh, New Hampshire president for FairPoint Communications, said yesterday following a legislative hearing on House Bill 1305.

The exemption came out of state tax reform in the 1990s, when lawmakers implemented a communications services tax to capture revenue from emerging wireless telecommunication businesses. They decided the pole tax amounted to "double taxation" and was unfair, he said...

The pole tax isn't small.

'We were calculating our potential exposure at $6.6 million,' McHugh said of FairPoint.

That's more than the $1.6 million the company pays in taxes for buildings and other property it owns, he said."

Here's why it matters to the average person with a traditional (non-cable) phone bill: Fairpoint isn't just going to eat the tax. Or at least, it hasn't yet.

"Phone customers come into the debate via a new surcharge the Public Utilities Commission recently authorized FairPoint to cover the tax.

The company can collect 99 cents per line, up to 25 lines per account, beginning in April.

It's a temporary surcharge, pending more state review."

But even the consumer angle isn't free from controversy, as Toole writes:

"'If the concern is really the size of phone bills, the state could reduce the communications services tax, which produces about $80 million a year, by a tiny percentage,' the association said. "That should make everyone happy: no one's tax bill increases and no one's phone bill increases.'"

HB 1305 just got its House committee hearing yesterday. The bill is due out of committee on February 9.

Copyright 2012 StateImpact New Hampshire. To see more, visit http://stateimpact.npr.org/new-hampshire/.