Bill limiting municipal taxes would have little effect in Cape

A proposed state law would limit how much cities could tax telephone companies on the basis of gross receipts, but Cape Girardeau city officials said the legislation would have little impact locally.

That's because Cape Girardeau charges a flat fee rather than a percentage of gross receipts, city attorney Eric Cunningham said.

Under the bill, favored by cell phone companies, cities would have to roll back their percentage-based gross receipts taxes over the next several years. By January 2008, cities could levy a maximum tax of 3 percent on gross receipts of telephone companies that provide service in their communities.

"For us, that reduction in percentage shouldn't have the kind of effect it does in other cities," Cunningham said.

City manager Doug Leslie said, "We didn't take an active position on this. But we certainly understand the position of other cities and their concern."

Cape Girardeau currently charges a flat tax of $27,500 annually. But that franchise tax currently is paid only by Southwestern Bell, said city finance director John Richbourg.

Wireless companies have refused to pay, saying that cellular phones are a type of radio transmission and not a telephone service.

Cape Girardeau is among a number of Missouri cities that filed suit against the cellular telephone industry on Dec. 31, 2001, seeking to force wireless companies to pay five years of disputed back taxes.

At least four wireless companies operate in Cape Girardeau, Richbourg said. At the current franchise rate, they combined would owe $110,000 annually.

Richbourg said such revenue would go in the city's general fund where it could be used for basic city operations.

But city officials aren't counting on the money just yet.

The bill, passed by the House and now before the Senate, attempts to invalidate lawsuits brought by cities against the wireless industry.

Cape Girardeau city officials aren't happy about that provision. But Cunningham questioned if legislation could end ongoing litigation.

The Missouri Municipal League opposes the bill, arguing that it would force cities to lessen the tax on all telephone companies. "Essentially, it will hurt city revenue," said Stuart Haynes, a staff associate for the league.

"The scale back we don't think is fair,' he said.

But Haynes said he can't predict how Cape Girardeau would fare with its flat tax. According to the league, only three cities in Missouri levy a flat tax for telephone service.

mbliss@semissourian.com

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