Date: 02/01/2006

Final
BILL SUMMARY for HB06-1173

HOUSE COMMITTEE ON FINANCE

Votes: View--> Action Taken:
Moved amendment L.001 (the amendment allows for a
Moved to postpone House Bill 06-1173 indefinitely.
Refer House Bill 06-1173, as amended, to the Commi		PASS
PASS
FAIL


02:29 PM -- House Bill 06-1173

Representative Knoedler, prime sponsor, explained that House Bill 06-1173 exempts Voice-over-Internet Protocol (VoIP) service from state and local taxation except when it is included in a package or bundle of services and cannot be separately billed or accounted for. The bill allows a customer who believes that he or she has been erroneously taxed for VoIP service to notify the service provider within two years and obtain a refund. Representative Knoedler explained the cases that led to the restrictions on taxing Internet commerce and commented on the tie between e-commerce taxation and imposing taxes on VoIP. Representative Knoedler commented on the concerns of allowing local governments to tax over 1,100 VoIP providers who are not based in Colorado. Representative Knoedler commented on the differences between VoIP and conventional telephone service and pointed out the infrastructure differences for both services.

The following persons testified:

02:47 PM -- Mr. Gary Witt, Colorado Telecommunication Association, testified in opposition toward the bill and commented that the bill does not provide fair tax treatment to VoIP and other conventional land-line providers. While the bill exempts VoIP from sales taxes, there may be unintended consequences.

02:52 PM -- Mr. Ken Fellman, Mayor of Arvada, and Colorado Municipal League, testified in opposition toward the bill. Mr. Fellman commented that cities are very dependent on sales taxes and the impact of the bill on local sales tax collections could limit the ability of a city to provide certain services. Mr. Fellman commented that VoIP as an industry does not need a tax incentive and said that VoIP providers will do well with or without the tax credit. Mr. Fellman commented that the bill would provide an uneven treatment for telecommunication providers. All providers need to play by the same rules when it comes to taxation. Mr. Fellman closed by saying that the cost to Arvada if the sales tax on phone services would disappear would be about $400,000 annually.

03:12 PM -- Mr. David Roland, Advanced Intelligence Networks, testified in support of the bill and commented that his company is putting together VoIP service for rural areas of Colorado. Mr. Roland commented on the differences between VoIP services and conventional telephone services. Mr. Roland commented on the difficulties tied to taxing Internet services. Mr. Roland closed by saying that VoIP technology will make it possible to provide less costly phone service to rural communities in Colorado.
03:25 PM -- Ms. Jessica Wright, Mountain States Council, testified in support of the legislation. Ms. Wright commented that the taxation of VoIP service would amount to double taxation because services that support VoIP are already taxed. The bundling of services makes it difficult to know the tax that is being charged for each type of service. Mr. Wright closed by saying that this bill eliminates a double tax.

03:32 PM -- Ms. Angela M. Pleasants, student at the Graduate School of Public Affairs, CU Denver, commented on an e-commerce research project that found that a tax on VoIP service would stifle the development of VoIP technology. Ms. Pleasants commented on the need to allow high-tech businesses to flourish by not taxing these businesses when they are in the start-up phase.

03:41 PM -- Mr. John McCormick, Qwest Communications, testified in support of the legislation. Mr. McCormick commented on the taxes that Qwest pays on its infrastructure. Mr. McCormick closed the presentation by discussing the issue of tax fairness and reasons that VoIP service should not be taxed.

The committee closed by discussing Internet taxation. After a brief discussion, Representative Vigil placed the bill on the table for action.
BILL:HB06-1173
TIME: 04:02:38 PM
MOVED:Kerr
MOTION:Moved amendment L.001 (the amendment allows for a two-year moratorium on VoIP taxation). The motion passed on a 12-1-0 vote.
SECONDED:Massey
VOTE
Benefield
Yes
Cloer
Yes
Crane
Yes
Frangas
Yes
Garcia
Yes
Harvey
No
Jahn
Yes
Kerr
Yes
Marshall
Yes
Massey
Yes
McCluskey
Yes
Judd
Yes
Vigil
Yes
Not Final YES: 12 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS
BILL:HB06-1173
TIME: 04:07:26 PM
MOVED:Cloer
MOTION:Refer House Bill 06-1173, as amended, to the Committee of the Whole. The motion failed on a 7-6-0 vote.
SECONDED:Kerr
VOTE
Benefield
No
Cloer
Yes
Crane
Yes
Frangas
No
Garcia
No
Harvey
Yes
Jahn
No
Kerr
Yes
Marshall
No
Massey
Yes
McCluskey
Yes
Judd
No
Vigil
No
Not Final YES: 6 NO: 7 EXC: 0 ABS: 0 FINAL ACTION: FAIL
BILL:HB06-1173
TIME: 04:14:42 PM
MOVED:Garcia
MOTION:Moved to postpone House Bill 06-1173 indefinitely. The motion passed on a 7-6-0 vote.
SECONDED:Benefield
VOTE
Benefield
Yes
Cloer
No
Crane
No
Frangas
Yes
Garcia
Yes
Harvey
No
Jahn
Yes
Kerr
No
Marshall
Yes
Massey
No
McCluskey
No
Judd
Yes
Vigil
Yes
Final YES: 7 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: PASS