Taxation Position Statements - 2011 Legislative Program

Communications Tax

In 2007, a new telecommunications tax law repealed a number of local taxes and replaced them with a statewide communications tax.  At that time, it was intended that local governments be guaranteed, on a locality-by-locality basis, tax revenues equivalent to their FY 2006 percentage share of total statewide telecommunication tax revenues, with the amount of new tax generated for each locality to be equivalent to such telecommunication tax revenue received in FY 2006.  Changes in market area, customers served, and new technologies should periodically be examined within the context of the law, to ensure a modern communications tax system for localities which reflects and reacts to an ever-changing landscape.

The 2010 General Assembly included language in the 2010-2012 biennium budget that appropriates the communications tax as if it were a state revenue.  However, these local taxes are only collected by the state, and are not state General Fund revenues, and were placed in a special trust fund to avoid this exact scenario.  The decision by the GA and Governor to appropriate these local dollars, coupled with budget language to use a portion of these funds on services managed by the Department for the Deaf and Hard-of-Hearing, is an alarming turn of events for local governments and breaches the agreement carefully reached between localities and the Commonwealth in 2007.  (Revises previous position.)

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