Senate Bill 615 expands tax base for telecom, prompting sector backlash
The Puerto Rican Telecommunications Alliance has called on Gov. Jenniffer González-Colón to veto Senate Bill 615, warning that the legislation could impose sweeping new taxes on telecommunications services and infrastructure.
The measure, which amends dozens of provisions in the Puerto Rico Municipal Code, includes a broad new definition of “voice channel” that could expand the tax base dramatically. The term, as outlined in the bill, would encompass not only traditional telephone lines but also mobile networks, antennas, cables, and systems transmitting audio, video or data — as well as associated infrastructure such as poles and repeaters.
By linking this revised definition to existing municipal tax powers, the bill could increase the number of taxable assets and transactions, the alliance said. Under the Municipal Code, cities may impose fees on a company’s volume of business within their jurisdiction.
“This measure represents a disproportionate increase in the sector’s tax burden,” said Pedro G. Andrés, president of the telecommunications alliance. “If each voice channel is taxed $3,000, the economic impact could amount to hundreds of millions of dollars.”
The group warned that, under preliminary estimates, taxing active mobile devices alone could generate more than $1.1 billion in annual revenue for the Municipal Revenues Collection Center (CRIM, in Spanish). These costs, it added, would likely be passed on to consumers through higher internet and phone bills.
The alliance also raised concerns about the bill’s language, saying the definition of “voice channel” is overly vague and could lead to legal uncertainty.
“The definition is so ambiguous and broad that it lends itself to multiple interpretations and creates legal uncertainty that jeopardizes the viability of operations in the sector,” Andrés said.
He also criticized lawmakers for advancing the legislation without consultation from the telecommunications industry or regulatory agencies.
“This type of legislative action, without dialogue or technical analysis, undermines an essential service and the country’s competitiveness,” he said.
While the bill includes various administrative reforms to the Municipal Code, its telecommunications provisions have drawn the most criticism. Industry advocates say the redefinition could allow municipalities to apply fees to elements of telecom infrastructure that were previously untaxed.
In its statement, the alliance emphasized the essential role of telecom services in daily life, citing their importance to remote education, health care, economic activity and public safety.
“Puerto Rico cannot afford to jeopardize its telecommunications infrastructure or further burden its citizens,” Andrés said.
The notion of taxing “voice channels” is not a novel one. It has been explored and implemented in various formats both in the United States and abroad. However, the definition presented in Puerto Rico’s Senate Bill 615 departs significantly from its purported intent and, in doing so, risks undermining the very infrastructure it seeks to regulate.
To avoid an overly technical explanation, it’s important to clarify that under legacy circuit-switched telecommunications systems, a “voice channel” referred to a bearer path used for two-way voice communication during a call. In today’s digital landscape, with the advent of packet-switched technologies, there is no longer a distinct or dedicated “voice channel.” Voice is now transmitted as data, via Internet Protocol (IP) packets, indistinguishable from any other form of digital communication.
Thus, what is being taxed under this bill is not a voice channel in the traditional sense it is the evolving infrastructure that supports all forms of modern communication. This raises a fundamental question: Are we penalizing innovation?
If the intent is to create a framework for taxing voice communication, then the legislation should reflect the nuanced distinctions that other jurisdictions have already acknowledged. For instance, many governments differentiate between “interconnected VoIP” (Voice over Internet Protocol) and “non-interconnected VoIP,” with the latter often categorized as a service and therefore exempt from certain taxes. Though still a form of regulation, such distinctions are at least grounded in technological and commercial realities.
Beyond the definitional inaccuracies, the implications of SB 615 are far reaching. Imposing new taxes on telecommunications infrastructure will hinder Puerto Rico’s ability to compete in a digital economy increasingly driven by innovations such as the Internet of Things (IoT), smart cities, autonomous drone services, e-commerce, fintech, and telehealth. Startups and established firms alike depend on affordable, accessible voice and data networks to operate and grow.
Moreover, this tax could disproportionately impact Puerto Rico’s aging and economically vulnerable population, for whom telecommunications access is not a luxury, but a necessity. In this light, SB 615 becomes less a tool of fiscal policy and more a barrier to economic development and social equity.
In the end, while the bill may score a short-term legislative win, it risks becoming a textbook case of a Pyrrhic victory, one where the cost of success is far greater than any benefit it might deliver.
I am writing to express my concern regarding Senate Bill 615, which proposes a significant expansion of the tax base for telecommunications services and infrastructure in Puerto Rico.
While the bill aims to increase municipal revenue, its broad and ambiguous redefinition of “voice channel” could result in sweeping new taxes on essential telecom infrastructure—including mobile networks, antennas, cables, and even data transmission systems.
This would not only increase operational costs for providers but also impose a heavier financial burden on consumers, who are likely to face higher internet and phone bills as a result.
The Puerto Rican Telecommunications Alliance has already warned that taxing each voice channel at $3,000 could generate over $1.1 billion annually, a cost that would ultimately be passed down to the public.
This measure risks undermining access to critical services such as remote education, healthcare, and emergency communications especially at a time when connectivity is more vital than ever.
I urge lawmakers to reconsider this legislation and engage in meaningful dialogue with industry stakeholders to ensure that any tax reforms support both economic growth and consumer affordability.
Thank you for your attention to this important matter.
Sincerely,
Maria Munoz San Julian