The Wisconsin Public Service Commission (PSC) has initiated a rulemaking to introduce an alternative method of calculating the tax equivalent for municipal utilities. The tax equivalent is calculated annually and represents the amount of money a municipal utility pays directly into the municipality's general fund. The rulemaking responds to concerns that the tax equivalent was excessive when compared to the gross receipts taxes paid by investor-owned utilities. The proposed rule would allow municipal officials either to retain the tax equivalent method or switch to one based on a percentage of gross receipts (em 0.97, 3.19, and 10.83, respectively, for gas, electric, and water utilities. A municipality would be able to freeze its tax equivalent at existing levels until that amount is exceeded based on gross receipts. This would enable municipalities to control the adverse rate and tax impact of increased tax equivalents due to major plant additions.
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