NGA report: Telecom taxes 'burdensome'

State and local government tax policies for the telecommunications industry are overly complicated and burdensome, according to a report released Tuesday by Utah Gov. Michael Leavitt, chairman of the National Governors' Association.

The report, "Telecommunications Tax Policies: Implications for the Digital Age," is the first in a series based on Leavitt's theme of "strengthening the American state in the new global economy." The report, however, is not NGA policy.

"The telecommunications industry as a whole is overtaxed in a complex, burdensome system," Leavitt said during a telephone press conference. "We need to establish competitive neutrality and encourage infrastructure development, especially in rural areas."

Leavitt said as services are increasingly bundled by vendors with cable television, telephone and Internet services all in the same pipe, a "radical simplification" of state and local taxes is needed to allow "market efficiency to determine who the winners and losers are."

In Leavitt's home state of Utah, an agreement has been reached with AT&T that incorporates all of the company's packaged services into one bill. "We need a level playing field as these technologies begin to converge," he said.

NGA executive director Ray Scheppach said the association would help coordinate a group of six to eight states to work toward simplifying their telecommunications tax policies. "Then, we'll go back to the federal government if we need legislation," he said.

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