Engler Pushes For $70M dollar Internet Tax

The Detroit News ^ | 12/7/01

[Moleman]

LANSING -- Pro-business, tax-cutting Republican Gov. John Engler is using all his political muscle this fall to push a $70-million tax on telecommunications companies to bankroll a high-speed cable Internet system.
   The governor says the industry isn't expanding the so-called "broadband" service fast enough to keep Michigan residents and businesses in step with the information age.
   Ameritech and other companies insist they are ramping up broadband rapidly enough to keep up with lukewarm demand, so state government should stay out of it.
   "We have service out there, and it's expanding every day," said Scott Stevenson, president of the Telecommunications Association of Michigan, which lobbies for Ameritech and other phone companies.
   Consumer groups, such as the Michigan Consumer Federation, are concerned about the tax being passed on to customers.
   "Ameritech would be assessed around $44 million, and I don't see them just forking over that money without taking it out of our hides," said Rick Gamber, executive director of the Michigan Consumer Federation.
   Any pass-through to customers would be more than offset by a $200 million telephone rate reduction included in the three-bill package that would implement the proposal, Engler aides say.
   The debate raises critical questions about the future of economic development in Michigan and the ability of its residents and businesses to send and receive large computer files at speeds 20 times as fast as using traditional dial-up Internet service.
   A key question is whether the private sector, making decisions based on the bottom line, will get broadband to every pocket of the state quickly enough or whether state government should jump in.
   "This is a big problem in Michigan and the U.S.," said Richard Wiggins, an Internet author and information technologist at Michigan State University. "The lack of access to affordable broadband is a hindrance to moving information around."
   Engler argues that families need broadband for education services as well as entertainment and shopping. Businesses need it to send data and sell products. Schools need it to offer the same advanced classes in remote areas that are available in urban centers, he says.
   Rob Pilat, a Lake Orion sales representative, can't get high-speed Internet service even though he lives in a new subdivision near a technology-rich area. He wants it for his two young children and for his business, but he says broadband coverage is "very sporadic" throughout state.
   "It used to be a fun thing, but now you really need it," Pilat said. "To be in business today, you have to have it."
   Jeanna Burton, 41, of Westland, uses traditional dial-up service in her home. She says high-speed Internet isn't at the top of her wish list.
   "We all get spoiled getting things so quickly," she said. "I can sit here and wait for my Internet to kick in."
   Engler's proposal would apply to telephone companies, cable providers and cellular phone companies that offer high-speed Internet service. The fee would be a 7-cent charge for every foot of telecommunications line carrying broadband across public property.
   Half of the receipts would go to local governments and half to a new state broadband authority. The authority, using its tax-exempt bonding advantage, would partner with telecommunications companies to move broadband lines into unserved areas, most of which are in Northern Michigan.
   The companies say 73 percent of state households can now access broadband. But Engler says that leaves the state 37th among in percentage of families and businesses using high-speed Internet. Michigan is last in per-capita investment in broadband, according to the governor.
   He is personally lobbying lawmakers and interest groups to get the legislation passed before the end of the year.
   The governor faces an uphill climb. As a lame duck, he is losing clout. The Legislature is in session for only another week or two before holiday recess. Chances will diminish in 2002, an election year when campaigning will divert lawmakers' attention. Engler concedes he doesn't yet have the votes in either the House or the Senate.
   Engler is also fighting traditional allies, including much of the business community, as well as Democratic-leaning labor groups, such as the Communications Workers of America.
   Engler has won support from the Michigan Municipal League, which represents local governments, university presidents and some key lawmakers.

[Moleman]

Engler is a RIMO.
I have never seen taxes go up so much under a suposably republican governor.
Engler is a taxing moron.

[Fury]

Incredible. There is plenty of infrastructure in the ground, on poles and via satellite along with the companies to deliver it. Heck, they are going out of business because things are so tight and right to the edge, business speaking.

We need no new tax to fund even more Internet services. Just incredible.

[Phantom Lord]

The taxation of internet sales is UNCONSTITUTIONAL

Article 1, Section 9, Clause 5 of the US Constitution...
No tax or duty shall be laid on articles exported from any state.

It is clear as day. What do these idiots not understand? And why do no opponents of internet taxtion (i dont know of any elected ones atleast) use the unconstitutional argument?

I supposed many in favor of internet taxation would argue that this applies only to the federal government. I would then submit that they think the rest of the Constitution applies to the states and federal government.

[Phantom Lord]

I forgot to add in my post that the above proposal is not about taxing internet purchases. But we all know what the next step is once taxation of or for the internet in any form comes along.

[Billthedrill]

He's gonna tax the telecommunications companies - now where, just where do you suppose they're going to get that money?

[Made In The USA]

He's a Republican?! Does he think that businesses are simply going to eat this tax and not pass it on to consumers?

Take a look at those insiduous little surcharges on most of your utility bills (including your cellular). Not all of these surcharges are mandated to be charged to the consumers, they're mandated to be paid by the service provider.

[okie_tech]

"Engler's proposal would apply to telephone companies, cable providers and cellular phone companies that offer high-speed Internet service. The fee would be a 7-cent charge for every foot of telecommunications line carrying broadband across public property."

?!?!?!?!??!?!?!?!This guy is a republican? He will expand the service by taxing it and making it more expensive? Is this guy an idiot?

[Numbers Guy]

Take a look at those insiduous little surcharges on most of your utility bills (including your cellular). Not all of these surcharges are mandated to be charged to the consumers, they're mandated to be paid by the service provider.

Part of the deal is to eliminate the nearly $4 monthly access charge that Ameritech charges to all local phone customers in its operating area in Michigan. So the net of these two proposals ($200 million down, $70 million up) is a major reduction in charges, not an increase.

The Michigan Legislature thought it had eliminated the $4 surcharge before, but Ameritech went to court and found some narrow ruling on a Federal issue that allowed them to continue to rake in the $200 million. The new legislation would get around that Federal loophole and allow for discontinuation of the charge.

I don't much like Engler's broadband taxation idea either, but the net of the entire package will be lower charges to phone users in the state, not an increase.

[JohnGalt]

No matter how reasonable the arguement, it surrenders the moral high ground that taxes are just plain too high and need to be lowered and eliminated everywhere.

How many state lottery experiments do we have to have till people discover its all just a sham?

[Phantom Lord]

Take a look at those insiduous little surcharges on most of your utility bills (including your cellular). Not all of these surcharges are mandated to be charged to the consumers, they're mandated to be paid by the service provider.

Let us not forget that the FCC FORBID phone companies from itemizing the Gore Tax on phone bills. Reason, customers would see it!

[ohioman]

You got that right. It is an embarrasment that Engler calls himself a Republican. He's a McCain clone.

[NoCurrentFreeperByThatName]

ping

[Moleman]

I forgot to add in my post that the above proposal is not about taxing internet purchases. But we all know what the next step is once taxation of or for the internet in any form comes along.
Agreed, this is the slippery slope to Internet sales tax, another pet project of Englers...

[Moleman]

?!?!?!?!??!?!?!?!This guy is a republican? He will expand the service by taxing it and making it more expensive? Is this guy an idiot?
Umm, well YES he IS AN IDIOT.
And I voted for him!!
TWICE!
Youuu WHOOO Republicans, please nominate a REAL republican next year!

[Protagoras]

Youuu WHOOO Republicans, please nominate a REAL republican next year!

What is a "real" Republican? Please name a few for me. Thanks

[riley1992]

He's been pushing for this for quite a while now. When he first came into office he was a decent governor. Now? Well, this pretty much answers that.

[Bonaparte]

"... is not about taxing internet purchases."

Indirectly, it is. No business absorbs tax expense. This is always passed on to the consumer. If Engler succeeds here, the next step will be internet sales tax. It's always done incrementally, just like the income tax. I'm sitting here looking out my window at the Golden Gate bridge in the distance, for which the toll was only supposed to be imposed for as long as it took to cover its cost of construction, a cost that was paid off in full many, many years ago.

[Moleman]

ummm, well, ahhh, hmmm
You don't want me to "Throw my vote away" on some third party candidate who respects the constitution do you??

[WhiteGuy]

Consumer groups, such as the Michigan Consumer Federation, are concerned about the tax being passed on to customers.

Corporations pass on ALL their expenses to the consumer, including taxes.

But engler is a republican, and we all must work from within to improve the party....

sheep