Bill would forgive cell phone taxes

The move could lower prices for consumers on cell phone bills.
Monday, May 7, 2007 | 12:00 a.m. CDT; updated 11:26 p.m. CDT, Saturday, July 19, 2008

JEFFERSON CITY — A dispute between cell phone companies and Missouri cities would be eliminated by legislation under consideration by the Missouri Senate.

At issue is a tax that cities and municipalities charge telephone companies for operating within their boundaries. For years, cell phone companies have not paid the tax, claiming the mobile phone industry is distinctly different from the land-line telephone business and the rates levied by cities are discriminatory because they are higher than most sales tax rates.

But local governments have charged that cell companies owe them millions of dollars in back taxes.

While the dispute between wireless phone companies and Missouri cities has so far played out in the courtroom, Rep. Shannon Cooper, R-Clinton, is sponsoring legislation that would nullify the issue by throwing out the lawsuits and capping the amount of the business license tax that cities levy on telephone companies.

Cooper said constituents have complained about fees put on their phone bills that result from telecommunications companies passing the business license tax onto consumers. He dismissed concerns raised by critics of his bill that it will reduce local tax revenue.

“When constituents complain, the legislature steps in,” Cooper said. “They’re just tired of their phone bills going higher and higher.” His bill would limit the tax at 5 percent — 7 percent less than what Cooper said some municipalities charge now.

Under Cooper’s bill, back taxes that cities think they are owed by cell phone companies would not have to be paid.

Many city and municipal governments are opposed to the legislation and have gone to court to try and force mobile phone providers to pay the taxes.

Cooper’s bill cleared the House earlier this year and is pending before the full Senate.

There is a case pending over the taxes between about 45 Missouri cities and wireless provider Sprint Spectrum.

Gary Markenson, executive director of the Missouri Municipal League, which is opposed to Cooper’s bill, said if cell phone companies in Missouri paid the business license taxes statewide, it would total $70 million a year in local government tax revenue.

“If big corporations could just not pay their taxes and let it coast for eight years, and then when they’re getting ready to get nailed, go to the legislature and get all their back taxes forgiven, we’re going to be in a mess,” Markenson said.

As people have increasingly turned away from land line phones in favor of cell phones in recent years, local tax revenues have declined because cell companies have not paid the business license tax.

In August, a bill enacted two years earlier and similar to Cooper’s measure, was ruled unconstitutional on a technicality by the Missouri Supreme Court.

Cooper said the legislature has dismissed lawsuits in the past relating to school funding and gun manufacturers but said he was not sure whether his bill, if enacted, would stand up in court.

“I can’t even pretend to fathom what the courts will do,” he said.

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