A bill that would allow companies a gross receipts and compensating tax deduction on construction and equipment expenses for expanding broadband services is making its way through the Legislature.
Proponents say the deduction provides an incentive for broadband expansion and would be an economic development tool. The deduction would apply to investments in construction of new infrastructure and equipment such as transmission facilities, fiber-optic and copper cables and switching equipment for serving new areas. It would apply only to systems capable of delivering download speeds of at least 10 megabits per second and upload speeds of 1 mps.
“The idea is to stimulate new broadband infrastucture in the state because we’re so far behind the rest of the country,” said Katherine C. Martinez, director of legislative affairs for CenturyLink of New Mexico.
New Mexico is in the bottom quarter of states on connectivity, according to CenturyLink, and near the bottom on average download speed.
An earlier version of the bill would have provided an exemption from gross-receipts taxes. That was changed to a deduction, which triggers a reporting requirement so that its impact could be better tracked by the state.
According to a fiscal analysis of the bill, the deduction would cost the state a little over $1 million a year.
The bill has drawn support from a variety of business groups.