Elesha Barnette
+ FollowWireless Tax Fairness Act to Reduce Cost of Mobile Services
Earlier in the month, we reported on the ever-increasing taxes on mobile devices and services consumers are forced to pay. In doing so, we highlighted a report by economist Scott Mackey, of KSE Partners, in which he details that wireless users now face a combined federal, state, and local tax and fee burden of 16.3%, a rate two times higher than the average retail sales tax rate and the highest wireless rate since 2005.
Mackey’s report goes on to highlight wireless tax rates at +20% in Florida, Washington, Illinois and New York, as well as the jaw-dropping 23.7% Nebraskans pay. Tax rates on wireless phone services are so high because consumers must bear the burden of local, state and federal taxes. The doubling, and often times tripling, of wireless taxes are the result of state and local governments using the growing industry as a way to supplement dwindling treasuries and balance budgets.
Despite these alarming trends, there is help on the way in the form of the Wireless Tax Fairness Act of 2011. A bi-partisan effort, 140 members from the House and the Senate have already signed on. The bill, should it become law, would enact a five-year ban on taxes and fees for wireless services. While the federal fees would not be hindered, state and local taxes would be subject to the moratorium. Protected in the bill are fees that subsidize emergency 911 services and the Universal Service Fund, which funds phone service for rural and low-income residents.
The National Black Chamber of Commerce testified before the Subcommittee on Courts, Commercial and Administrative Law in favor of the bill. Arguing against excessive taxes, Harry C. Alford, President and CEO of the group, said “taxation should fund our government and should not be excessive or debilitating to our economy.”
Alford went on to emphasize the importance of mobile devices to the African American community:
Cell phones are no longer a luxury item. They are a necessity to our daily living. It enhances communication, information, education and creates many opportunities for employment and wealth building. Current tax levels on mobile devices resemble luxury taxes such as liquor, cigarettes and jewelry. It is abusive and terribly unfair. It must be checked…Finding ways to tax the masses in a disproportionate manner improves nothing. It, in effect, hurts our economy and lessens the opportunities for our citizens.
The Wireless Tax Fairness Act of 2011 is the third attempt by lawmakers to limit taxes on wireless services in three consecutive congressional sessions. Similar bills that came out in 2008 and 2009 died in Congress. If this bill is passed, wireless consumers could get some much needed relief in these challenging economic conditions.
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3 Responses to Wireless Tax Fairness Act to Reduce Cost of Mobile Services
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John_Q_Public says:
Yes! This sounds like a great bill. Let's hope it can move through Congress swiftly and provide relief to millions of subscribers who are overburdened with these onerous and unfair taxes.
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Wm_Tucker says:
This bill, should it become law, only places a moratorium on new taxes. State and local governments would remain free to increase existing taxes and fees. It will not lower consumers' mobile phone bills one cent. In all likelihood, it won't even maintain the status quo.
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The Wireless Tax Fairness Act is MUCH needed legislation that needs to be passed in order to ensure affordable wireless service. Considering that many minorities rely on mobile broadband as their sole connection to the Internet, we need to make certain that incredulous taxes don't play a role in keeping those users offline.