Lawmaker pitches Netflix tax to fund rural broadband

Rep. Jay Powell, R - Camilla, conferring with colleagues on the house floor, Thursday, Feb. 8, 2018, in Atlanta. He is sponsoring a broadband bill to aid rural communities. (Bob Andres/Atlanta Journal-Constitution via AP)

Bob Andres

ATLANTA — Sticking a tax on Netflix, e-books and other digital services that currently go untaxed in Georgia would help pay for upgrades to internet connections in neglected corners of the state.

“We tax books but not Kindle downloads,” state Rep. Jay Powell, R-Camilla, said in an interview Thursday. “We used to buy movie tickets and go to Blockbuster — all of which were taxed — but now we videostream from Netflix.

“The market’s changing, but we’re still taxing the old stuff,” Powell said.

Powell, who heads the House Ways and Means Committee, co-chaired the House Rural Development Council. The broadband bill, which was filed Thursday, is the most ambitious measure to come so far from that panel’s yearlong work. About 16 percent of Georgians lack internet access.

The proposal would throw out a franchise fee that cable companies and other providers pay to set up in the public right-of-way.

And AT&T, Verizon and others would be exempt from paying a sales tax on equipment used to build out their networks statewide. Earlier proposals attempted to limit that tax break to work done in rural communities.

Powell’s measure would replace that lost revenue with a broader tax base, imposing a sales tax on music downloads, streaming services such as Netflix and Hulu, and other digital purchases.

Another tax would also expand to all communications services, including those not currently taxed such as satellite TV.

It’s unknown how much money Powell’s plan would raise, since analysts have not yet crunched the numbers. The money generated would go toward subsidizing broadband expansion in rural communities.

That funding, which would be awarded through a grant program, would be divvied out through a reverse auction. That means companies would compete for the money based on who can claim to bring the best service for the lowest cost, Powell said.

“We aren’t picking a technology,” Powell said. “I don’t care whether it’s satellite or whether it’s fiber to the home or whether it’s hybrid fiber coax or it’s wireless.

“We aren’t going to tell them how you do it, but if somebody comes in and says, ‘I’ll provide you broadband service for $20 a month and oh by the way, it’s dial-up.’ They are not going to be a priority in the scheme of things,” he added.

The measure came as a state senator, Steve Gooch, R-Dahlonega, introduced legislation in the Senate that seeks to address spotty internet service in rural Georgia.

Powell said he believes the council’s plan addresses the underlying issue — the high-cost to serve sparsely populated communities — and goes beyond just trying to clear an easier path for service providers navigating the local permitting process.

“If it takes 15 customers per mile, for instance, to make it a viable operation and you’ve only got five customers per mile, I can say, ‘You have to do the application process for free and do it in two days,’ and it’s not going to move the needle because the density just won’t support it,” Powell said.

“So you’ve got to address the fact that they cannot afford to invest the money in rural Georgia to serve them unless we address that density issue, and our grant program hopefully will do that,” he said, referring to the proposed state subsidies.

Powell said emphasis will be placed on communities where limited internet access affects public safety and hinders the use of telemedicine.

Jill Nolin covers the Georgia Statehouse for CNHI’s newspapers and websites.

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