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Florida high-tech tax war heats up

Florida technology companies are suing to prevent counties from taxing software,

The state of Florida was the scene for a high-tech tax battle this week as the state's local governments--like others across the country--grapple with Internet access and software taxation issues as technology become increasingly important in local economies.

This week, several Florida technology companies filed suit to prevent counties from taxing software, according to Reuters news service.

Individual Florida counties are proposing that software is tangible property and therefore taxable. While home computer users would be exempt from the proposed taxes, corporations with customized software would be taxed on their software assets. A bill that would prohibit the state from taxing software failed during Florida's 1996 legislative session, which ended two weeks ago.

But the technologies are arguing that software constitutes intellectual property only and therefore is not taxable. Airbus Service, Lockheed Martin, General Electric, and Encore Computer are involved in lawsuits with various counties in Florida to shield their software programs from taxation, Reuters reported.

A business group in Florida said the tax is impossible to fairly administer because of the difficulty of assessing the value of software. "You don't buy software--you license it," said Fran Conaway, vice president of communications at the Florida Chamber of Commerce. "This is the wrong message to be sending about high tech in Florida."

This recent tax fight is the second in as many months for Florida's technology industry. In April, the state government had proposed a tax on Internet service providers and Florida's high-technology industry staged a full-scale protest. But the Florida Net industry got a temporary reprieve this week when Governor Lawton Chiles formed the Telecommunciations Task Force to study the ISP sales tax and recommend action on the matter by February of 1997.

Meanwhile, across the Atlantic, the European Union recently issued a report advocating a "bit tax" on all information sent over the Internet, according to a report in Electronic Engineering Times. The Federal Communications Commission has stayed on the sidelines of the Internet taxation debate but has formed a joint review board to formulate a universal Net access policy in compliance with the Telecommunications Act.

Related stories:
Universal Net access policy proposed
Huge protest greets Florida Net tax
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