Three companion bills introduced in the Alabama Senate aim to spur private broadband development in the state by providing tax breaks.
Sen. Clay Scofield, R-Guntersville, is the author of SB 212, SB 213 and SB 214. The first would exempt broadband telecommunications network facilities built beginning this year from taxation for 10 years, while the second bill would exempt materials or equipment used by those facilities from the state’s sales and use tax.
The third bill would “encourage accelerated investment in broadband infrastructure by private businesses” by offering an income tax credit equal to 10 percent of the investment in broadband network facilities.
All three bills were first read on Feb. 11 and are awaiting hearings in the Senate Committee on Finance and Taxation Education.
Scofield didn’t return a call from Watchdog.org on Tuesday.
David Williams, president of the Taxpayers Protection Alliance, told Watchdog these potential tax breaks aren’t ideal, but they’re better than direct subsidies. He said the legislation is a bit different than corporate welfare because it’s not about trying to get companies to relocate, but “giving broadband providers an opportunity to expand their services without a direct government handout.”
“The one benefit of these tax breaks is that it doesn’t name specific companies, so it isn’t picking winners and losers and could benefit smaller and larger companies,” Williams said, adding he’s unsure if his organization would be for or against the legislation after a quick examination of the bills.
Scofield’s legislation comes in a year in which Republican Gov. Robert Bentley is pushing broadband expansion across the state, hoping to provide high-speed Internet to rural Alabamians.
He told a group of business leaders last month that he wanted to work with them to build a state-wide fiber-optic network. Alabama hopes to get between $200 million and $300 million from the federal E-Rate program, which pays up to 90 percent of the costs to run fiber to rural areas.
Bentley said if the state doesn’t take advantage of that program this year “this (network) probably will never take place.”
The first phase of that project involves public schools. Private providers would bid to build, operate and maintain the networks, but the state would own them.