Maryland Bill to Review Telecommunications’ ‘Tax, Fees’ System Raises Concerns

Advocacy group urges lawmakers not to include cable franchise fees that support PEG channels
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The head of a public, education and government (PEG) channel advocacy group urges Maryland lawmakers not to include cable franchise fees that support PEG channel in a state bill that seeks to review the state’s “telecommunications tax and fee systems.”

The state bill, the proposed “Telecommunications Taxes, Reform Commission and Moratorium” (House Bill 563) was introduced Feb. 3, 2012, and was referred to the House Ways and Means Committee.

On Feb. 22, that committee held a hearing on the bill, at which Sylvia Strobel, the chief staff officer of the Alliance for Community Media (ACM), testified and expressed concerns about HB 563; “specifically its potential impact on PEG operators in Maryland.”

The bill seeks to establish a state organization, the “Telecommunications Tax Reform Commission,” which would “assess the feasibility and fiscal implications of a competitively neutral telecommunications tax and fee system that eliminates the disparate treatment of similar telecommunications service providers.” The commission would submit a report of its assessment to the General Assembly during the 2013 session.

The bill says the reasons for the assessment of the “tax and fee system” are because “competition and changes in technology have expanded the types of telecommunications services to businesses and consumers in Maryland” and “most state and local taxes and fees on telecommunications services were adopted before these changes in technology and the emergence of competition.”

Therefore, the “current tax and fee structures may no longer be suitable for the telecommunications marketplace” and “the burden of collecting and remitting taxes and fees on telecommunications services is borne by providers of the services” who, along with other entities that receive revenues from telecommunications taxes such as the state and county governments, “should participate in any discussions about restructuring” those taxes and fees, the bill says.

In her testimony, Strobel said unlike public radio and public television, PEG channels do not receive any federal or state funding, but they “rely primarily on PEG access and franchise fees to pay their employees and operate their newsrooms and facilities.”

In addition, since 2005 there has been “a drastic reduction in community media centers in states that have moved away from local municipal franchise negotiations to a statewide system of franchise and access fees,” she said.

“While we understand why the General Assembly wishes to review the taxation issues, PEG and cable franchise fees should not be included,” Strobel said. Those fees “are best negotiated at local level, with agreements based on local needs of communities (as opposed to the general population base),” she said. “We [ACM] respectfully request that the state of Maryland take all steps necessary to prevent further erosion of public participation in U.S. cable communications systems now and in the future.”