This bill would create an entirely new taxation structure for telecommunications services. As amended in subcommittee, this complex bill includes the following:

• Eliminate existing county and city cable franchise fees, city telephone franchise fees, and sales taxes on local telephone service;
• Make “digital goods” – downloaded books, movies, music and the like -- subject to sales taxes (not currently taxed);
• Exempt broadband and internet-access equipment from sales tax, up to a maximum of $80M per year;
• Impose a new 2% state tax, and optional 2% local tax, on telecommunications services and prepaid wireless service. The local tax to be distributed to counties and cities based on the subscriber’s/customer’s address;
• Impose a new 2% state-only tax on direct-broadcast satellite service (Direct TV, Dish Network);
• Prohibit other local taxes or fees on communications services providers, other than ad valorem taxes, 9-1-1 fees, or other generally applicable fees/taxes.

Streaming services (Netflix, Hulu, etc.) are exempt from the communication services tax and sales taxes under HB 428.