Phone companies want the state to restore a property tax break for utility poles.
They argue the expense is passed along to consumers through higher bills.
The state's municipal association is fighting back.
Members dismiss the proposed exemption — pending before the Legislature — as a corporate subsidy underwritten by other property taxpayers.
"It is not the duty of municipalities and local taxpayers to rescue the telephone companies," the New Hampshire Municipal Association said in a statement.
The group is urging town officials to contact lawmakers and oppose the bill.
"People have short memories," Pat McHugh, New Hampshire president for FairPoint Communications, said yesterday following a legislative hearing on House Bill 1305.
The exemption came out of state tax reform in the 1990s, when lawmakers implemented a communications services tax to capture revenue from emerging wireless telecommunication businesses. They decided the pole tax amounted to "double taxation" and was unfair, he said.
The Legislature let the tax break lapse two years ago amid criticism the phone companies had an unfair advantage over other taxpayers.
No other business gets such a tax break, they all pay property taxes, the municipal association said.
"Many, perhaps most of them, have experienced hard times in the last three years. Yet, except for the telephone companies, not one of them has gone to the Legislature to ask for a property tax exemption," the association said.
Granite State Taxpayers leader Jim Adams said his group comes down on the side of the municipal association on this one.
"This is not a good idea," Adams said. "We were happy it was removed and we're going to stay there."
Adams maintains phone companies just pass along costs anyway.
"And look at all the tax breaks the state gave to Verizon, then they left the state," he said.
The pole tax isn't small.
"We were calculating our potential exposure at $6.6 million," McHugh said of FairPoint.
That's more than the $1.6 million the company pays in taxes for buildings and other property it owns, he said.
Phone customers come into the debate via a new surcharge the Public Utilities Commission recently authorized FairPoint to cover the tax.
The company can collect 99 cents per line, up to 25 lines per account, beginning in April.
It's a temporary surcharge, pending more state review.
"I hope it does not become permanent," McHugh said. "I would like to get the exemption reinstated so we would eventually not have to use the surcharge."
The municipal association contends if the state wants to help the phone companies, it should either put a subsidy line item in the state budget or give them a credit against the communications service tax.
"If the concern is really the size of phone bills, the state could reduce the communications services tax, which produces about $80 million a year, by a tiny percentage," the association said. "That should make everyone happy: no one's tax bill increases and no one's phone bill increases."
McHugh said the study committee proposed in the bill might let all parties find common ground, bringing together the telecommunications industry, the municipal association and others to work on the tax problem.
"The study committee is an important part of the bill that doesn't get talked about a lot," McHugh said.
Windham selectmen have taken no stand this year, but did oppose the tax break when the Legislature looked at it last year, Town Administrator David Sullivan said.
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