1. Opinion

Editorial: Clear the static on communications taxes

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Published Mar. 24, 2013

The newest hole in St. Petersburg's city budget may have come as a surprise to council members who voted just a few months ago for a $10 million property tax increase, but it underscores a growing problem for local governments across Florida. Changes in how consumers buy telecommunications services have meant lower tax collections for local governments and the state, including for the fund to build and maintain public schools. But in tax-averse Tallahassee, reform efforts have stalled. That's not in the best interest of Floridians, nor is it fair.

The city of St. Petersburg disclosed during union negotiations earlier this month that the city's operating deficit had grown to nearly $3 million, largely due to a drop in collections from the city's communications services tax. At the time the 2012-13 budget was written, city staffers estimated the city would collect nearly $13 million in such taxes based on collections over the previous three years. But after much lower than projected collections in the first quarter that ended Dec. 31, the estimate dropped to $11.5 million, more than $3.5 million less than the city collected in 2008-09.

It's a scenario being played out across the state under the complex communications services tax. Consumers pay state and local taxes on their cable television and mobile phone bills, but pay only state taxes on prepaid mobile phones and satellite dishes. The irony is that even as the telecommunications industry has grown, a market shift in how consumers access telecommunications has caused local governments' tax receipts to plummet from $916 million in 2008-09 to a projected $738 million this year. The state's gross receipt tax collections on communications services have also been affected, and that is a significant reason the Legislature has forgone capital investment in public school construction and maintenance for two years.

Yet reform efforts — aimed at simplifying the communications services tax by embracing just one statewide rate while also widening the services that are taxed — have stalled. Counties and municipalities that have traditionally charged the highest rate allowed under law are leery of getting shortchanged in future revenue-sharing schemes but are still interested in reform. Also suppressing debate is the Republican-led Legislature's general aversion to all things tax-related — even when current tax schemes are unfair and anticompetitive.

Satellite television customers and prepaid mobile phone users should pay the same taxes as their neighbors who subscribe to cable or traditional mobile phone service. And no state tax policy should favor one competitor's technology over another when it delivers the same service. Lawmakers should give this issue another look.