at least, not according to the House and Senate. The General Court has passed a bill, HB 1418, that exempts Internet service from the state’s Communication Services Tax. It now goes to the Governor.
The bill blows an eight-figure hole in the General Fund. Our legislators passed this bill without a Fiscal Note costing out the exemption, which was added at the last minute. But we can make an educated guess.
The CST is assessed on two-way communications. Television and radio broadcast services (over the air or over a cable) are exempt – they are not two-way. Traditional voice telephone service, DSL Internet service, cable Internet service, and cable VoIP service are all subject to the CST. The CST produced some $77.6 million in 2011 (big pdf: page 77).
How much of the $77.6 million tax revenue does HB 1418 eliminate? We don’t have a Fiscal Note to tell us, so we’ll use a napkin. For our household, the services we use that are subject to the CST today are landline voice, landline Internet, mobile voice, and mobile Internet. Of all that, the Internet service potion – exempted from the tax under this bill – is north of 40%. If that is representative, the bill costs the state some $31 million each year. That’s a very rough estimate – but it’s more data than our legislators bothered to get.
Although the CST is described as a tax on the consumer, collected and paid to the state by the communications company, I don’t have any hope of seeing my phone bill or cable bill drop if this becomes law. Both the landline phone company and the cable company have near local monopolies. They won’t lower their bills: neither the law nor competition will make them.
So, things are better than you thought. New Hampshire can afford to give big quasi-monopoly corporations like Comcast, Time Warner, and Fairpoint a $30+ million dollar windfall, year after year. Let that cheer you up for a moment.
Because you will foot the bill – either by filling that eight figure hole from other taxes (statewide property tax, anyone?) or by seeing state services cut still further.