Council considers reducing local Communications Services Tax

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Cable, phone and streaming services bills have a lot of different taxes and fees that subscribers often don’t know what they are.

Marco Island residents could soon see a reduction in one of those taxes as the City Council has approved bringing back a discussion to reduce its local Communications Services Tax by a 5-2 vote.

Chairman Jared Grifoni proposed bringing back a discussion on reducing the rate after authoring a white paper analyzing the local component of the Communications Services Tax.

Grifoni’s proposal suggested reducing the tax from 5.22 percent to 3.9 percent as of Jan. 1, 2019, and a further reduction to 2.1 percent in 2020.

The Communications Services Tax is comprised of both a state and local component.

In 2001, the city set its local Communications Services Tax rate at 5.42 percent. Outside of reducing the rate to 5.22 percent in 2002, the rate has gone unchanged by the city council.

Marco Island shares the highest rate of nearby taxing entities with the city of Naples, which increased its rate in 2010 to the same level. Unincorporated Collier County, the city of Bonita Springs, the town of Estero and Everglades City all have lower rates.

In addition to being higher than most taxing entities, Grifoni also said reducing the regressive tax would lessen the burden on lower income earners.

“It proportionately impacts lower income individuals more so than higher income individuals simply because this is tax you pay on your bill every single month,” Grifoni said.

Acting City Manager Guillermo Polanco said the tax revenues went into the general fund so they paid for general operations in the city.

Polanco warned that if the city wanted to move forward with the reduction, it would have to either cut expenses to balance the budget.

Based upon the city’s 2016 budget, a reduction of the local Communications Services Tax to the 2019 proposed rate would result in a little less than $218,000 in revenue.

Councilor Howard Reed, who voted against moving forward with the discussion along with Joe Batte, cautioned against reducing the tax because of potential effects on its general obligation revenue bonds and reducing services that citizens want.

“This tax has been apart of our city’s budget for a number of years,” Reed said. “It is part of how we balance our budget and removing it creates a couple of problems.”
 

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