It was Mr. Bumble who first opined that "the law is an ass", and it has certainly made a donkey of itself many times over in many parts of the world since Charles Dickens published Oliver Twist back in 1838.
And it continues to provide the odd smile or two. Take the arcane issue, long hotly-debated in the gentlemen's clubs and ladies salons of brahmin Boston, Massachussetts, as to whether, when telephone poles and their attendant wires, owned or jointly-owned by telecoms operators, cross over public rights of way they can be classified as being subject to tax.
You see in New England (and for all I know many other places in the US as well) cabling installed underground is subject to tax, but hitherto, most poles and bits of wire dangling over thoroughfares and sidewalks have not been taxable – except that is where a pole is jointly owned by a utility such as an electricity company and a telco as well. When that happens, the utility company pays tax on the pole and cables, but the telecoms carrier doesn't. Sensible, huh?
The legislation relieving telcos of the obligation to pay tax on poles and wires was passed over a hundred years ago as part of a programme to encourage the deployment of early telecoms technology and has remained in situ ever since.
But earlier this week, in a decision that sets a new legal precedent, the Massachussetts Appellate Tax Board has ruled that operator Verizon must pay taxes on poles and wires sited on or crossing over public roads and pavements.
"Big deal", you might think – and actually it is because the decision is expected to bring in a windfall of some US$78 million for some hard-pressed and financially-strapped municipalities.
Ron Rakow, Boston's Commissioner of Assessing commented,"The fact the telephone companies are going to start paying those taxes is going to start taking some pressure off the taxpayers - both residential and commercial."
Remarkably, an earlier decision by the Appellate Tax Board actually found that Verizon Wireless is not a telecoms company! However that particular and strange decision was reached, it has not been repeated and it seems that this time around the law does confirm that a good old-fashioned wireline company (with poles and cables for all to see) can indeed be classified as a telco. Progress, a wondeful thing.
Meanwhile, the municipalities have had to put on hold their plans for spending the cash unexpected windfall. Verizon says it is "reviewing the order and is likely to appeal.
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