HCS HB 209 -- SIMPLIFIED MUNICIPAL TELECOMMUNICATIONS BUSINESS
LICENSE TAX

SPONSOR:  Sutherland (Cooper, 120)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 10 to 5.

This substitute authorizes the simplified municipal
telecommunications business license tax.  After August 28, 2005,
any municipality may impose this tax on a telecommunications
company for the privilege of doing business within its borders.
The telecommunications company can pass the tax onto its retail
customers only if the company itemizes the tax on the customer's
bill.  The Director of the Department of Revenue will publish a
list of the municipalities imposing this tax.

The maximum rate of the gross receipts percentage for any
municipality is 5% for tax years 2006 and 2007 and 3% for 2008
and thereafter.

FISCAL NOTE:  No impact on state funds in FY 2006, FY 2007, and
FY 2008.

PROPONENTS:  Supporters say that the bill is the result of
several years of complaints about complex tax language.  The
proposal will decrease administrative costs and provide a
business licence tax comparable to the telecommunication tax.
With the switch from land lines to cell phones, a 10% growth is
expected in cell phone usage and a 3% decrease in land line usage
each year.  Telecommunication companies want to be taxed just
like any other business.  Current gross receipts tax rates are
between 2% and 11% on phones.  Laws were written over 30 years
ago and need updating.  The bill provides rate caps and
eliminates retroactive exposure to collect and pay back taxes.  A
law suit claiming underpayment of taxes has been filed by 40
cities in Missouri.  In general, wire line companies have paid
the taxes while wireless companies have not.

Testifying for the bill were Representative Cooper (120);
Southwestern Bell Company of Missouri; Sprint PCS; Cingular
Wireless; Nextel; Century Tel; Verizon Wireless; MCI; and ALLTEL
Communications.

OPPONENTS:  Those who oppose the bill say that time is needed to
settle the law suit and work out problems with the tax rates for
the decrease in land lines and the increase in wireless companies
before legislation should be offered.  Some companies, such as
U.S. Cellular, pay the tax while other telecommunication
companies are getting away without paying the tax even when local
law is clear.  This provides an unfair advantage to some
competitors.  Local governments assume revenue losses could
result from the bill.

Testifying against the bill were St. Louis County Police
Department; St. Louis County; Missouri Municipal League; City of
Jefferson; City of Florissant; City of Raytown; City of
Bridgeton; City of Lee's Summit; City of St. Louis; City of
University City; Independence City Counsel; and St. Louis County
Municipal League.

Karla Strobel, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:18 pm