BUFFALO, Wyo. — The Wyoming Telecommunications Association is asking lawmakers for a sales and use tax exemption for Internet expansion in the state.
During a presentation Tuesday before the Joint Revenue Interim Committee, the association estimated with an exemption it could save $2.4 million a year.
But Liz Zerga, an attorney and lobbyist representing some rural independent telephone companies that provide internet, cautioned that’s a rough estimate. Some companies didn’t or couldn’t provide estimates to the association.
The interim committee only listened Tuesday to presentations of tax issues. It did not make any decisions on tax exemptions.
The association is asking to be exempted from the sales and use taxes they pay for infrastructure and equipment “when we buy that and bring it into the state,” Zerga said.
Examples of what the industry calls infrastructure are fiber-optic cable, coaxial cable or wireless towers, said Jason Hendricks, president of the Wyoming Telecommunications Association.
Examples of equipment are electronics for the fiber-optics cabling and the wireless towers, he said.
In Wyoming, rural areas outside towns have Internet, but they are underserved in terms of speed. Most don’t have the higher speeds available in more populous parts of the state, Hendricks said.
It’s expensive to upgrade those areas, he said.
Broadband companies at the meeting said they would use money from the sales and use taxes to lay down more fiber or to raise more towers, except for one representative, who said she could not guarantee how all companies would use the exemption savings.
If all the savings were to be reinvested in new networks, businesses would benefit from faster or expanded Internet. That would create jobs and wages, said John Cmelak, a tax analyst for Verizon Communications.
The state sales and use tax is 4 percent. Counties can tax up to 3 percent additionally, although no county has ever taxed 3 percent. Counties assess an additional 1 or 2 percent, Wyoming Department of Revenue Director Dan Noble said.
Currently there are 51 tax exemptions in Wyoming, Noble said during a different presentation before the committee.
But there aren’t many tangible ways for the state to determine the effectiveness of each exemption, Noble said.
The exemptions could increase jobs or attract similar businesses to Wyoming, but it’s not known for sure, he said.
Lawmakers talked about possibly asking the Revenue Department and the Wyoming Division of Economic Analysis to analyze the effects of exemptions using econometrics, which Rep. Mike Madden, R-Buffalo, said is a statistic model that considers economic variables.
Madden would like the state to establish a tax exemption impact committee that would be charged with considering exemptions.
In addition to lost revenue to the state, local governments can be affected by exemptions, Madden said.
Sen. Jim Anderson, R-Casper, thinks the tax exemptions could be costing the state hundreds of millions in lost revenue a year. He also wants the state to study them.
“We can say where the money’s going to, come time when minerals are not paying all the bills in the state,” he said.
The Wyoming Taxpayers Association and the Equality State Policy Center are both studying exemptions.
“Along with this, we also want to emphasize the belief that disclosure is one of the keys here,” said Dan Neal, the Equality State Policy Center’s executive director. “We hope when we come out of this, part of the solution will require that these exemptions and their effects are fully reported by the beneficiaries and that information is posted publicly for everyone to see, including how much each company gets.”