Legislation to tax internet services such as Netflix, e-books and music downloads will soon be introduced in the Georgia House, despite opposition from Gov. Brian Kemp and Lt. Gov. Geoff Duncan.
The proposed tax is a priority for rural lawmakers in the Republican-led House, who say it could raise money to help subsidize construction of internet lines in areas where businesses need high-speed access.
But Kemp and some other Republicans say they’re skeptical of taxes on digital services unless they’re accompanied by tax cuts on other products.
House Rules Chairman Jay Powell, a Republican from Camilla, said he or a colleague will introduce a bill to tax digital goods and services. The 4 percent communications service tax would replace the state's existing taxes and fees on phone lines and cable TV, which range from 5 percent to over 7 percent.
“This is not a new tax,” Powell said Wednesday. “Technology is changing. The bottom line is, I’m getting movies, sports, news and all the things I’ve always gotten, but I’m getting them via a different medium, which is streaming services as opposed to cable TV.”
Kemp said in a Georgia Public Broadcasting interview that aired Tuesday that he wants to find other ways to extend internet access to rural areas.
“My first inclination is not to look at tax increases to pay for this,” Kemp said. “If we’re going to have some sort of offset, I’d be open to looking at that. I don’t know that raising taxes is the answer for me.”
Duncan, who as lieutenant governor presides over the state Senate, backed Kemp’s resistance to the tax.
“We’re going to build out rural broadband, but a new Netflix tax is not how we’re going to do it,” Duncan wrote on Twitter on Wednesday.
The tax was one of the recommendations of the House Rural Development Council, a group of powerful legislators led by Powell and Appropriations Chairman Terry England, a Republican from Auburn.
The council prioritized the tax as a way to help the 16 percent of households in the state that lack fast online access, saying it's necessary for economic growth, health care and education.
A sales tax on products sold online passed the Georgia General Assembly last year and went into effect Jan. 1. The internet sales tax requires online retailers who make at least $250,000 or 200 sales a year to collect state and local sales taxes on their products.
But downloads and streaming services remain tax-free in Georgia. A similar proposal for a communications service tax didn’t pass last year.
The tax, combined with the repeal of existing taxes and fees, would generate $48 million in 2021 and reach $310 million by 2024, according to state estimates.
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