Category: Internet

Time To Pull The Plug

Time To Pull The Plug

I’m fully aware that fairly or not pretty much anything I post is viewed as partisan, but that doesn’t turn a bad policy into a good one. I posted a more complete explanation on website below, but the latest attempt by Sen. Nesbitt and Rep. Griffin to address the broadband gaps in Michigan is just that, bad policy.

When you offer tax breaks to incentive something, it’s important to clearly define limits to prevent abuse. If you don’t then you’re just writing a blank check and in this case that check will be paid by local governments and schools.

By offering to exempt broadband equipment from property taxes without recognizing that much of the equipment is shared, you create a scenario where providers can now stop paying taxes on upgraded equipment if a single new customer is served. Property taxes fund much of the School Aid fund and local governments, so this policy risks pulling an unknown amount of funding from critical services, which is not only bad policy but potentially dangerous. The House Fiscal Agency can’t even estimate what that amount might be because there are too many unknowns.

Furthermore, the taxes which are potentially exempt are often not even paid by broadband providers. Many times providers pass those costs directly on to consumers in the form of surcharges on your bill. For example, AT&T customers pay a “Cost Assessment Charge” and Verizon customers pay an “Adminstrative Charge” on top of their normal rate. These charges are not government mandated but, according the companies themselves, are used to pay expenses like property taxes.

I’m just saying that while in some cases this might help spur infrastructure expansion, it’s written in a way that leaves a lot of room to be taken advantage of. The bottom line is that Griffin & Nesbitt, both of whom have taken money from telcom industry PACs, should and probably do know better.

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