WILLIAM DONALD SCHAEFER, Governor                           Ch. 680

(B) SUBJECT TO SUBSECTION (C) OF THIS SECTION, THE GOVERNING BODY OF
A COUNTY OR MUNICIPAL CORPORATION MAY PROVIDE, BY LAW, FOR:

(1) THE AMOUNT AND DURATION OF A PROPERTY TAX CREDIT UNDER
THIS SECTION; AND

(2) ANY OTHER PROVISION NECESSARY TO CARRY OUT THIS SECTION.

(C) THE PROPERTY TAX CREDIT UNDER THIS SECTION MAY NOT EXCEED 60%
OF THE COUNTY OR MUNICIPAL CORPORATION PROPERTY TAX ASSESSED ON THAT
PROPERTY.

Preamble

WHEREAS, For many decades, the telephone industry was a classic natural monopoly
due to the high initial costs of entering the market and the significant economies of scale
associated with service delivery, and Maryland, like most states, has a tax structure for
companies operating as monopolies that differs from those in competitive industries; and

WHEREAS, A series of technological advances combined with Federal Commerce
Commission rulings in the telephone industry during the 1960s and 1970s gradually opened a
door to competition in the industry, and these changes eventually led to the breakup of the
telephone industry monopoly with the forced divestiture of American Telephone and Telegraph
in 1984;. and

WHEREAS, Since that time competition has continued to increase in the
telecommunications industry in the provision of local telephone and long distance services as
well as in equipment manufacturing and sales; and

WHEREAS, The growth of the telecommunications industry in Maryland is important to
the overall growth in the State's economy, and it is important that State and local governments
tax telecommunications companies fairly to ensure that telecommunications companies
operating in Maryland are not at a competitive disadvantage; and

WHEREAS, Maryland State and local governments currently rely on the revenues
generated from the taxes on telecommunications companies, and economic forecasts indicate
that growth in all revenues based on the existing tax structure is not expected to keep pace with
growth in overall government spending over the next 5 years; and

WHEREAS, Before making changes to one type of tax on telecommunications
companies, it is important that all of the different taxes on the industry be assessed and
evaluated as a whole; now, therefore,

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That a Task Force on Telecommunications Taxes shall be established for the purpose of
undertaking a broad, comprehensive, and thorough study of the State and local tax structure
on telecommunications companies in Maryland.

The study shall include an examination of all State and local taxes being paid by
companies in the telecommunications industry in Maryland. It shall include but not be limited
to income, gross receipts, sales, excise, and property taxes as well as methods of valuing real
and personal property.

- 3053 -