HB 0714

AN ACT excluding cable Internet services from the communications services tax.

SPONSORS: Rep. Luebkert, Hills 54; Rep. Ouellette, Merr 33

This bill excludes the provision of access to Internet services by cable from the communications services tax.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Communications Services Tax; Definition; Cable Internet Services Excluded. Amend RSA 82-A:2, III to read as follows:

III. "Communications services" means services for transmitting, emitting, or receiving signs, signals, writing, images, sounds or intelligence of any nature by any electromagnetic system capable of 2-way communication and includes, [~~without limitation,~~] messages or information transmitted through use of local, toll and wide area telephone service; private line services and networks, whether leased, rented or owned; channel services; telegraph services; teletypewriter services; cable television; computer exchange services; mobile telecommunications services; facsimile services; specialized mobile radio; stationary 2-way radio; paging services; or any other form, whether stationary, portable or mobile, of 2-way communications; or any other transmission of messages or information by electronic or similar means, between or among points by wire, cable, fiber-optics, laser, microwave, radio, satellite or similar facilities. Provided, however, that communications services shall not include:

(a) Value added services in which computer processing applications are used to act on the form, content, code and protocol of the information for purposes other than transmission;

(b) Purchases of communications services by a communications services provider for use as a component part of the service provided by him to the ultimate retail consumer who originates or terminates the taxable end-to-end communications, including carrier access charges, right of access charges, charges for use of inter-company facilities, and all communications services resold in the subsequent provision of, used as a component of, or integrated into end-to-end communications services; or

(c) The one-way transmission of radio or television programming, by cable, broadcast, satellite, microwave or similar facility, which is made available generally to any person able to receive such transmission, together with the interaction, if any, of such person required for the selection of such programming other than by use of the same facility by which such transmission was received.

(d) The provision of access to or services on the Internet by cable transmission facilities.

The Department of Revenue Administration indicates this bill will decrease state unrestricted general fund revenue by an indeterminable amount in FY 2004 and each year thereafter. There is no fiscal impact on local and county revenue or state, county and local expenditures.

The Department of Revenue Administration (DRA) states that the effect from the implementation of this bill will be to decrease the communications services tax by an indeterminable amount by excluding cable Internet services from taxation. The amount is indeterminable because DRA has no current method of either estimating the impact of this change or updating prior studies that indicated that a $1 to $5 million revenue loss would occur from similar legislation. DRA also states that dual purpose digital and voice lines will be difficult to classify for taxation purposes under this new provision. The DRA can, however, administer this change within its current budget.