Politics & Government

Bill would provide tax exemptions for telecommunications companies

OLYMPIA -- Backers of a new state bill say tax exemptions for telecommunications companies could boost Washington's economy.

Senate Bill 6322 would provide the companies with investment incentives by eliminating sales and use taxes applied to the purchase of telecommunications equipment.

The exemptions, which would take effect Aug. 1 if the bill becomes law, also aim to create and retain jobs within the state's telecommunications industry.

"This bill is all about jobs," said Sen. Sharon Brown, R-Kennewick, the bill's primary sponsor. "What we need to do is create incentives for businesses to continue to operate and work in Washington state."

A report from the Association of Washington Business showed manufacturing and equipment incentives created 58,000 new jobs in Washington between 1995 and 1999, adding $27.5 billion to the state's economy, Brown said.

The bill was heard Tuesday in Olympia by the Senate Committee on Energy, Environment & Telecommunications.

Sen. Mike Hewitt, R-Walla-Walla, is a co-sponsor of the bill but was not at Tuesday's hearing.

Sen. Doug Ericksen, R-Ferndale, said Washington needs to be able to compete with the technology of leading Asian countries like South Korea and Japan.

"Broadband deployment to all parts of Washington state is crucial to economic development and will benefit all people," Ericksen said.

The committee heard testimony from lobbyists Jim Blundell of T-Mobile USA and Greg Diamond of TW Telecom.

The state has the third-highest tax burden in the nation when it comes to telecommunications, Blundell said.

"Washington has a ways to go as far as improving the climate for investment," Blundell said.

The tax exemptions would generate nearly 9,000 new jobs, $1.7 billion in new investments, and more than 100,000 new broadband connections, Blundell said. They would would be applied specifically to service providers and their purchase of network-based telecom equipment.

Blundell also cited a 2012 study assessing the economic impact of taxation on U.S. communications investment, including four case study states. In North Dakota and Iowa, tax reductions or eliminations increased investment, he said. In Massachusetts and South Carolina, where similar taxes were increased, investment decreased.

Diamond said there is a direct correlation between tax exemptions and job creation, adding that TW Telecom is expanding in several of its markets, including Seattle and Spokane.

The company doesn't have to put its equipment in Washington state to serve customers, he said, and might relocate equipment to avoid higher taxes.

"We'd much prefer to invest where our customers are located," Diamond said.

Washington State University student Matt Benoit: 509-947-9277, mbenoit@tricityherald.com; Twitter: @Matt_Benoit_