PHILADELPHIA (September 28, 2021)- Rep. Annie Kuster (NH-02) introduced a bill on Friday that promises critical relief to small private rural water utilities and communities across the nation by stopping a tax that discourages crucial water infrastructure investments and increases housing costs.
The current tax treatment of contributions in aid of construction (CIAC) under the Tax Cuts and Jobs Act (TCJA) has had the effect of creating a tax regime that pushes water-infrastructure investment activity outside the very regulated water utilities that are best suited to undertake it and toward other entities, such as homeowners’ associations that are not accustomed to providing water and wastewater services. The TCJA also made the receipt of government grants, often used to enhance water service or provide for environmental remediation, taxable, which prevents many small utilities from receiving this assistance. Alternatively, systems that do receive grants are subject to large tax bills, which drive rates up and subject their customers to double taxation as those customers’ taxes are used to fund the grants.
National Association of Water Companies (NAWC) President and CEO Robert F. Powelson issued the following statement in response to the bill’s introduction:
“On behalf of America’s water companies, I applaud Representative Kuster for her leadership in introducing H.R.5366. This legislation promises to improve the quality of life not only for Rep. Kuster’s constituents, but also for rural communities and small business water providers across the nation.
Now more than ever, we cannot compromise when it comes to preserving public health through sustained investment in water infrastructure. Preventing taxation of contributions in aid of construction allows America’s water companies to continue to provide safe, reliable drinking water and wastewater services to customers at an affordable price.”
An identical Senate version of this bill was introduced earlier this year by Senators Jeanne Shaheen (D-NH) and Lisa Murkowski (R-AK). The Infrastructure Investment and Jobs Act, currently under consideration in the House of Representatives, includes the provisions of this bill.