File No. 811.73/21.

The Executive Secretary of Connecticut to the Secretary of State.

Sir: Governor Holcomb has directed me to acknowledge receipt of and to reply to your letter of the 26 ult., concerning taxation of the Compagnie Française des Câbles, with its enclosure of a copy of the memorandum of the French Ambassador.

For many years the statutes of this State have imposed a tax upon all telegraph companies doing business within the State. Previous to 1913 the basis of taxation was the number of miles of wire in use. In 1913 the law was amended so that the gross earnings of each company furnished the basis for the tax. Where the business of a company was not located wholly within the State, a proportion of the gross earnings which bears to the total the same ratio that the number of miles of wire operated in this State bears to the total number of miles of wire in use by the company gives the valuation upon which the tax is imposed. The rate of this tax is three per cent. Every such company is required once a year to make a return to the tax commissioner of the State giving its name and location, total gross earnings, whole number of miles of wire in use by it, and number of miles of wire used by it in the State. In the event that any such company fails to make this return, the State board of equalization, from such data as it can find, makes an estimate of the gross earnings upon which the tax should be paid. Every company is given the right to appear before the board of equalization and to be heard upon the amount of the valuation for taxation.

Until about two years ago the Compagnie Française des Câbles made no return to the tax commissioner, nor did the State board of equalization attempt to establish any valuation for taxation purposes in this State, the fact that this company was operating wires here never having been brought to the attention of the tax commissioner. The compagnie was then requested to make a return under the law, but refused to do so. The board of equalization, therefore, adopted as a valuation for taxation purposes the sum of thirty thousand dollars. This obligated the compagnie to pay to the State the sum of nine hundred dollars each year. The compagnie has never paid anything, nor have any steps yet been taken to compel it to do so.

The tax commissioner, whose duty it is to see to the collection of this tax, is at present away on his vacation. Governor Holcomb has [Page 402]directed that the matter be brought to his attention as soon as he returns, and that all available information be at once transmitted to you, with such suggestions or recommendations as he can make, with reference to the proper course for the State to adopt. As the law stands, the compagnie is liable for this tax, and it is the duty of the tax commissioner to collect. The only proper and legal method of obviating the payment is by act of the Legislature, exempting it from taxation. The Legislature of 1915 adjourned in May, and there will not be another session until January, 1917. The Governor will take up with the tax commissioner the matter of taking no steps to force payment of this tax until the Legislature has had an opportunity to determine whether or not it will exempt the compagnie. After this conference Governor Holcomb will at once inform you what the policy of this State will be in the interim before the meeting of the next General Assembly.

W. M. Maltbie.