Telecom execs: Nixing B2B exemption could spike prices by 19.5%
Representatives from Puerto Rico’s telecommunications sector presented a united front Tuesday against the proposed elimination of the business-to-business tax exemption, saying “far from helping the island solve its fiscal problems, it will trigger a double-digit increase in the price of products, services, operating expenses and the cost of living in general.”
In testimony before members of the Senate Finance Committee — of which there were a scant three lawmakers present at one point — telecom representatives warned that eliminating the B2B exemption could bloat prices to the end consumer by as much as 19.5 percent.
“The imposition of a B2B sales tax directly affects the resale of telecommunications services. Most of the companies that make up our industry and are providing residential and commercial service, depend on the purchase of lines because not all companies have the infrastructure to directly sell voice and data services. The economic impact on the end user could represent up to 19.5 percent increase in the services billed,” the group predicted in the message of consensus delivered by Attorney Jorge Bauermeister.
The lengthy testimony voiced the joint opinion of nearly a dozen providers, namely: AT&T Mobility Puerto Rico, Claro/Puerto Rico Telephone, Open Mobile, T-Mobile and WorldNet; cable providers Choice Cable and Liberty Cablevision; broadband providers VPNet Inc., Critical Hub, Data @ccess, and Neptuno Networks, which presented joint testimony.
“The telecom industry understands the seriousness of Puerto Rico’s fiscal situation and recognizes the limitation of time and the sense of urgency, and is aware that all available options are a bitter pill for the island,” the group said in its testimony. “It’s not about us or the private sector in general being against the government, we’re in favor of reviving the economy, create jobs, encourage savings, promote investment, raise the level of productivity, lower the island’s debt and increasing per capita income.”
“Despite having limited time to analyze the project and identify the effects it will have on our industry, we can conclude and in turn anticipate that it will have a very adverse effect on the industry and the local economy,” the group further noted.
Telecom sector representatives said despite economic challenges, the industry has continued to grow and expand during the past 20 years, while offering lower prices to consumers.
Passing the bill to end the B2B exemption would threaten that growth.
Sector representatives also noted that companies and its customers would be adversely affected because eliminating the B2B exemption would “considerably increase the costs of doing business, places companies that resell services at a serious disadvantage and would cause the reduction and/or cancellation of network investments for 2014.”
Over the past five years, the telecom industry has invested nearly $2 billion in infrastructure that “Puerto Rico needs to remain competitive,” the group said.
“The telecom industry wants to continue growing, bringing jobs and investment to the Puerto Rican economy, so we are forced to conclude that we oppose this measure because it limits and obstructs the growth of the economy and of the Puerto Rican workers,” the group concluded.