It seems simple enough. Those who own property should pay property taxes. Yet for 20 years state law exempted telecoms from paying property taxes on phone poles. Last month towns won a decisive victory when the NH House voted against reinstating that exemption, which expired last year. The exemption was enacted in 1990 when NH added a 7 percent communications tax onto customers' phone bills.
The invoices are now rolling in to the tune of $3.23 million for FairPoint Communications, the largest landline provider with 414, 768 million lines, and $136,000 for Granite State Communications, a Weare-based firm with 7,300 users. Telecom companies say ending the exemption will mean double taxation as landline customers already pay the service tax monthly.
Allowing the exemption to expire means we are taxed twice and our customers are taxed twice to the estent we pass it on to customers, says Pat McHugh, state president of FairPoint Communications. This is a new tax, he says adding when the 1990 tax exemption took effect, telecom companies were mandated to lower rates. While cable providers pay attachment fees to pole owners, FairPoint says those fees only cover equipment upkeep.
Municipalities disagreed, arguing that telecoms should pay taxes like everyone else. People think it's a special tax on poles, says Cordell Johnston, who handles govern-ment affairs for the NH Municipal Association. It's not. Its the same tax everyone pays on their property. Johnston says all states, except Pennsylvania, tax phone poles and every New England state has a sales tax on telecommunications services just like New Hampshire does.
FairPoint counters that a true comparison would require a state-by-state look at the entire tax structure," not just selected taxes relating to telecommunications. Both FairPoint and Granite State Communications question how pole values are assessed.
I don't know how poles and wires became so valuable, McHugh says. FairPoint also points out its annual tax bill for buildings in NH is $1.6 million. Bill Stafford, COO of Granite State Communications, puts his bill at $76,747.
The change comes at a tough time for telecoms nationwide as people are switching solely to cell phones. FairPoint had 8.8 percent fewer landline customers in the third quarter of 2011 than it did a year ago, though that is less than the 11 percent year-over-year loss it experienced in the second quarter of 2010. It increased high speed data customers by 8.2 percent during the same period. Granite State Communications has lost 31 percent of its access lines since 2004.
McHugh says the FairPoint is not sure how much of the tax would be passed on but says the NH Public Utility Comission has approved a $0.99 cent pass through charge per line per month beginning in April. Johnston says municipalities just want their fair share.