Change in sales tax exemption could impact Minnesota’s ability to meet broadband goals
Change in sales tax exemption could impact Minnesota’s ability to meet broadband goals. Loss of sales tax exemption on equipment may mean higher costs for companies, consumers
or Minnesota’s telecommunications companies, there is good news and bad news that comes every time the State Legislature meets at the Capitol. But with the conclusion of the 2013 legislative session, telecom companies received some bad news. Throughout the state, local telecoms, including TDS Telecommunications Corp. (TDS®), will face new fiscal challenges due to the removal of the sales tax exemption previously allowed on central office equipment. The new law takes effect on July 1.
“The result of the new law,” says Jean Pauk, government and regulatory affairs manager for TDS, “is that it will become more costly for companies to deploy high-speed Internet service across the state. In the long-run, it’s a cost that may be passed on to customers. It could also slow down the progress of expanding high-speed Internet service.”
TDS, along with members of the Minnesota Telecom Alliance, is disappointed in the change in law.
“Equipment costs are a normal part of doing business,” said Pauk. “But this sales tax exemption was a critical piece of growing our telecommunications network, which includes delivering high-speed Internet service to some of the hardest to reach areas in rural Minnesota. We’re obviously disappointed to see this change in law. We will work with Governor Dayton and our state legislators on getting this exemption reinstated. It’s critical, especially if Minnesota is to meet its broadband goals and get high-speed Internet service to those still without.”
The sales tax exemption on central office equipment was removed as a result of a proposal by Gov. Dayton in his original budget. While sales tax exemptions were expanded for other businesses, the exemption for central office equipment was repealed. This was in direct contrast to the recommendations of the Governor’s own Broadband Task Force, which suggested expanding the exemption to include all broadband equipment purchases.
“Overall, this was a legislative session filled with challenges and opportunities to educate legislators and the public about the vital role that the MTA’s members play in connecting Minnesota to the world,” said Brent Christensen, MTA president and CEO. “There is much work to be done at the State Capitol in 2014, but we are confident some steps were taken toward accomplishment of many future legislative goals that will mean good things for Minnesota telecoms.”
The next legislative session begins on Feb. 25, 2014.
# # #
