Final
BILL SUMMARY for
HB05-1158
HOUSE
COMMITTEE ON
FINANCE
Votes:
Action Taken:
Moved amendment L.001 (strike below). The motion
Moved amendment L.002 as a technical amendment to
Refer HB 05-1158, as amended, to the Committee of
Pass Without Objection
Pass Without Objection
PASS
11:00 AM -- House Bill 05-1158 - Concerning the Voice Over Internet Protocol Tax Freedom Act
Representative Knoedler,
prime sponsor, distributed: amendment L.001 (Attachment E), a strike below; amendment L.002 (Attachment F); a news commentary article on Voice over Internet Protocol (VoIP) (Attachment G); and a Legislative Council Staff memorandum on a fiscal assessment of amendment L.001 (Attachment H). Representative Knoedler discussed VoIP.
Representative Knoedler explained
that cable companies and smaller Internet phone companies such as Vonage
(a New Jersey-based VoIP provider)
have been the initial providers of Voice over Internet Protocol (VoIP), a service that allows subscribers to send and receive voice communications over the Internet using a broadband connection. VoIP converts the voice signal from subscribers' telephones into a digital signal that travels over the Internet. The digital signal is then converted back at the other end so that subscribers can speak to anyone with a regular phone number.
Representative Knoedler commented that w
hen placing a VoIP call using a phone with an adapter, the user hears a dial tone and dials just as regular telephone users. Some VoIP services may also allow subscribers to make a call directly from a computer using a conventional telephone or a microphone.
Representative Vigil questioned whether home rule municipalities can be included in the bill.
The following persons testified:
11:10 AM --
Mr. Jeff Garrett, Qwest Communications, testified in support of the measure. Mr. Garrett indicated that Qwest's Direct Service Line network would allow customers to subscribe to VoIP. Since the network infrastructure is in place, Qwest expects that VoIP will be a service used in every state including Colorado. He stated that VoIP should be free from government regulation and state and local government taxation and that the passage of House Bill 05-1158 will ensure that VoIP becomes available to everyone in Colorado. When asked about the cost to subscribe to VoIP, Mr. Garrett responded by saying that most VoIP providers charge about $39 to make calls anywhere around the world.
11:18 AM --
Mr. Bob Barton, Tax and Research Manager for Qwest, discussed the taxes and fees that are imposed on Broadband users. Mr. Barton discussed the jurisdictional issues involved with knowing where a VoIP call originates from.
The committee discussed the taxes and fees that are assessed on phone services. Mr. Barton commented that the federal excise tax is being applied to Vonage's VoIP service. The committee discussed whether House Bill 05-1158 is premature and whether the General Assembly should wait until the federal government decides on whether state and local governments should tax VoIP users.
11:39 AM --
Ms. Jessica Wright, Executive Director for American Electronics Association, testified in support of the legislation. Ms. Wright commented that one research group estimates that 40 percent of all households in Colorado will use VoIP by 2009. House Bill 05-1158 will allow companies to develop and begin providing VoIP service in Colorado. Ms. Wright commented that VoIP is an emerging technology that should be allowed to develop before it is taxed.
11:50 AM --
Mr. Ken Fellman, Mayor of Arvada, representing local governments, and the Colorado Municipal League, testified in opposition to the bill. Mr. Fellman commented that the bill is not needed because the federal government will be making a decision on whether VoIP should be taxed. He suggested that state legislation is not needed and would compromise local government sales tax revenues that fund a city's operating budget. The revenues that a local government derive from a sales tax on phone service pays for vital services such as fire and police protection. Mr. Fellman discussed the Federal Communications Commission Vonage decision regarding the state regulation of VoIP and commented that the federal government would soon be issuing a decision on whether to tax VoIP services. Mr. Fellman commented that if VoIP takes off as expected, local governments will lose significant sales tax revenues that fund vital local government services. Mr. Fellman noted the state needs to wait and see what Congress does before House Bill 05-1158 is passed. If VoIP subscribers really need a tax break, the state should offer users an income tax credit.
The committee discussed whether an issue of double taxation could occur should House Bill 05-1158 not be enacted. Representative Knoedler commented that DSL service must first be in place before VoIP is possible to use. If persons who subscribe to DSL service are assessed a local government sales tax on the service, and if the same person is taxed on VoIP, they would be paying a double tax.
Representative Vigil commented that if VoIP users were not taxed, it would be unfair to persons who have a traditional land-line phone service to continue to pay taxes and fees on phone services.
BILL:
HB05-1158
TIME:
12:13:25 PM
MOVED:
Witwer
MOTION:
Moved amendment L.001 (strike below). The motion passed without objection by those members present.
SECONDED:
Cloer
VOTE
Benefield
Cloer
Crane
Frangas
Garcia
Jahn
Marshall
Massey
May M.
McCluskey
Witwer
Judd
Vigil
Not Final
YES:
0
NO:
0
EXC:
0
ABS:
0
FINAL ACTION:
Pass Without Objection
BILL:
HB05-1158
TIME:
12:17:37 PM
MOVED:
Witwer
MOTION:
Moved amendment L.002 as a technical amendment to L.001. The motion passed without objection by those members present.
SECONDED:
Massey
VOTE
Benefield
Cloer
Crane
Frangas
Garcia
Jahn
Marshall
Massey
May M.
McCluskey
Witwer
Judd
Vigil
Not Final
YES:
0
NO:
0
EXC:
0
ABS:
0
FINAL ACTION:
Pass Without Objection
BILL:
HB05-1158
TIME:
12:18:43 PM
MOVED:
Cloer
MOTION:
Refer HB 05-1158, as amended, to the Committee of the Whole. The motion passed on a 7-6-0 vote.
SECONDED:
May M.
VOTE
Benefield
No
Cloer
Yes
Crane
Yes
Frangas
No
Garcia
No
Jahn
Yes
Marshall
No
Massey
Yes
May M.
Yes
McCluskey
Yes
Witwer
Yes
Judd
No
Vigil
No
Final
YES:
7
NO:
6
EXC:
0
ABS:
0
FINAL ACTION:
PASS