When the Oregon legislature changed the state's tax rules last year, it was trying to convince Google Fiber to bring its high-speed Internet to Oregonians.
But lawmakers apparently didn't realize that the rule change would also hand a big tax break to Comcast. The new rule reduced property taxes for companies that offer gigabit-speed Internet service, which Google sells for $70 a month with no construction fees passed on to customers. But the rule change didn't specify that companies have to offer gigabit service at any particular price in order to qualify for the tax break. Comcast thus now qualifies for lowered property taxes because it offers 2Gbps Internet service, despite charging prices that would steer most ordinary customers to slower Internet speeds. Comcast's 2Gbps service costs $300 per month, with $1,000 in startup fees.
Rep. Phil Barnhart (D-Eugene) told utility regulators yesterday that the tax break was meant to spur investments in new networks and that legislators never considered that a company charging such high prices for gigabit service would get the tax break, according to The Oregonian.
"The legislature is not likely to be that foolish," he said. "We are foolish often, but usually not that foolish."
But the state Public Utility Commission ruled 3-0 that Comcast's gigabit service qualifies the company for the tax break because the law as written did nothing to prevent other companies from benefiting. The tax exemption would still have to be certified by the state Department of Revenue.
The commission also confirmed that services from Frontier Communications and Google Fiber make those companies eligible for the tax break, The Oregonian reported.
Google Fiber hasn't actually started offering service in Oregon yet. Google lists Portland as a "potential fiber city," meaning it hasn't made a final commitment to build there yet.
The tax in question is an unusual one, using "central assessment" to tax a company's property based on such nebulous factors as the value of the company's brand. Comcast previously sued the state Department of Revenue over the tax, but it lost an Oregon Supreme Court decision in October 2014. The decision said that companies offering data transmission services are subject to this form of assessment.
Local government officials who tried to block Comcast from getting the tax break said there are "tens of millions" of dollars on the line, money used to fund schools, libraries, and other government services, The Oregonian also reported.