TESTIMONY OF THE HONORABLE JOSEPH E. BROOKS
COUNCIL MEMBER, RICHMOND, VIRGINIA
on behalf of
THE NATIONAL LEAGUE OF CITIES
before the
HOUSE JUDICIARY SUBCOMMITTEE ON
COMMERCIAL AND ADMINISTRATIVE LAW
Thursday, May 4, 2000
Summary of Testimony
This testimony states the National League of Cities' (NLC) strong support for the Wireless Telecommunications Sourcing and Privacy Act (H.R. 3489).
NLC supports the Wireless Telecommunications Sourcing and Privacy Act as meaningful telecommunications tax simplification that respects the fiscal needs and autonomy of local governments. The National League of Cities is the oldest national association representing municipal interests in Washington, DC; and its membership includes more than 135,000 local elected officials from cities and towns across the nation.
The current application of local taxes on wireless services presents unique and difficult problems for local governments, the wireless service providers, and consumers. There has been considerable debate among industry and state and local governments as to which jurisdictions should have the right to tax wireless calls. Is it the town, county or state from where the call originated? Is it where the call terminated or where some element of the wireless provider's transmission facility is located?
The Wireless Telecommunications Sourcing and Privacy Act answers this question and others like it in a way that upholds and adheres to traditional notions of state and local sovereignty with respect to taxation. The measure does not change the ability of states and localities to tax telecommunications services. It is generally revenue-neutral among local governments, equitable among carriers and taxing jurisdictions, and considerably easier to administer. For local government, the measure addresses several important issues - nexus, collection and remittance of existing taxes due, and of course, simplification and uniformity.
Overall, this legislation benefits consumers, state and local governments, and the wireless industry.
TESTIMONY OF THE HONORABLE JOSEPH E. BROOKS,
COUNCIL MEMBER, RICHMOND, VIRGINIA
on behalf of
THE NATIONAL LEAGUE OF CITIES
before the
HOUSE JUDICIARY SUBCOMMITTEE ON
COMMERCIAL AND ADMINISTRATIVE LAW
Thursday, May 4, 2000
Mr. Chairman and Members of the Subcommittee, the National League of Cities (NLC) is pleased to have this opportunity to share our views on the Wireless Telecommunications Sourcing and Privacy Act. My name is Joseph E. Brooks, and I am a City Council Member from Richmond, Virginia. I also currently serve on the National League of Cities' Board of Directors.
The National League of Cities represents 135,000 mayors and local elected officials from cities and towns across the country that range in population from our nation's largest cities of Los Angeles and New York to its smallest towns. NLC is the nation's oldest national association representing municipal interests in Washington. At this time, I ask that my written testimony be submitted for the record.
On behalf of the National League of Cities, I would like to express my gratitude to the sponsor of the Wireless Telecommunications Sourcing and Privacy Act (H.R. 3489), Representative Charles Pickering. His leadership on this issue clearly shows his confidence in the ability of state and local governments to resolve complex telecommunications issues without federal preemption of traditional municipal authority.
The mobility afforded to millions of American consumers by mobile telecommunications services has helped transform the American economy, facilitate the development of the information superhighway, and provide important public safety benefits. As we enter the 21st Century, however, the telecommunications industry and state and local governments have been wrestling with numerous taxation issues. This measure is positive proof that we can forge solutions that address the critical needs of cities and foster the growth of the telecommunications industry. NLC welcomes the opportunity to develop a partnership with you, Mr. Chairman, and the members of the Subcommittee, to address the Wireless Telecommunications Sourcing and Privacy Act and other federal efforts relating to meaningful telecommunications tax simplification that respects the fiscal needs and autonomy of local governments.
Today, I want to voice the National League of Cities' strong support for the Wireless Telecommunications Sourcing and Privacy Act. This legislation is the culmination of a three-year cooperative effort between the wireless industry, the National League of Cities, the National Governors' Association, the Federation of Tax Administrators, and the Multi-State Tax Commission. Working with industry and our state partners, we have developed a measure that we believe provides a straightforward solution to a very complicated problem. From the National League of Cities' perspective, this legislation benefits consumers, state and local governments and the wireless industry.
The application of local taxes on wireless services presents unique and difficult problems for local governments and for the wireless service providers. There has been considerable debate among industry and state and local governments as to which jurisdictions should have the right to tax wireless calls. Is it the town, county or state from where the call originated? Is it where the call terminated or where some element of the wireless provider's transmission facility is located?
The Wireless Telecommunications Sourcing and Privacy Act answers this question and others like it in a way that upholds and adheres to traditional notions of state and local sovereignty with respect to taxation. The measure does not change the ability of states and localities to tax telecommunications services. It is generally revenue-neutral among local governments, equitable among carriers and taxing jurisdictions, and considerably easier to administer. For local government, the measure addresses several important issues - nexus, collection and remittance of existing taxes due, and of course, simplification and uniformity.
The measure bolsters the ability of state and local governments to collect those taxes they choose to impose on wireless providers while simplifying the wireless providers' job of determining which taxes apply to them. The measure removes any doubt as to a local taxing jurisdiction's ability to impose an existing tax on cellular services by expressly recognizing the authority of the taxing jurisdictions indicated by the customer's place of primary use, and preventing the exercise of additional authority by any other local taxing jurisdictions. The measure does not mandate any expenditure of state or local funding.
In addition to preserving state and local government revenues, the Wireless Telecommunications Sourcing and Privacy Act lowers the cost of collecting taxes that are owed. I cannot stress enough, that the current system is an accounting nightmare and a drain on local governments. Overall, the existing system is administratively burdensome for local governments and costly for consumers. State and local taxes that are not consistently based can result in some telecommunications revenues inadvertently escaping local taxation altogether, thereby depriving local governments of needed tax revenues to pay for the vital services they provide such as police, fire, and emergency medical services. The Wireless Telecommunications Sourcing and Privacy Act would relieve local taxing authorities of burdensome audits and oversight responsibilities without losing the authority to tax wireless calls. The measure puts local governments and service providers on a level playing field by sparing them the arduous task and expense of determining the taxability of every individual cellular call included in a bill, including calls that cross taxing jurisdictions multiple times during the same call. The measure establishes a uniform standard for sourcing cellular telecommunications for all state and local governments that tax these activities.
The measure's new method of sourcing wireless revenues for local tax purposes is needed to avoid the potential for double or no taxation; and to provide carriers, taxing jurisdictions and consumers with an environment of certainty and consistency in the application of tax law. For local governments, uniformity that respects local autonomy is important, because it simplifies compliance for our cities and avoids multiple taxation. This measure provides much needed relief for state and local governments.
The measure's public-private partnership shows that state and local governments and the wireless industry can work together to produce beneficial results for all stakeholders.
Mr. Chairman and Members of the Subcommittee, I greatly appreciate your leadership on this issue, and look forward to working with you as this crucial piece of legislation moves forward toward final passage. I would be happy to answer any questions that the Subcommittee may have at the appropriate time.
Thank you.