Today, Rep. Zoe Lofgren (D-CA) and Rep. Trent Franks (R-AZ) re-introduced landmark bipartisan legislation to help bring relief to the average American cell phone user. H.R. 2309 entitled the Lofgren/Franks 2013 Wireless Tax Fairness Act aims to give wireless consumers a break from excessive state and local government taxes on cell phones. This is an issue that Politic365 has been covering for years since it disproportionately affects minority communities. 41% of Hispanics and 33% of African Americans live in wireless only households. Today, we celebrate a potential break through the re-introduction of this legislation.
It’s been nearly eleven years since the National Governors Association (NGA) and the National Conference of State Legislatures (NCSL) urged states to reform and modernize their wireless taxes. Today, the average American wireless consumer now pays more than 17.2% in monthly wireless taxes and fees. This means that for your wireless service every month, you’re paying a tax rate that is two and a half times higher than the tax rate you pay for your average good or service. Over the past decade, state houses and the FCC have sought to raise revenues by targeting wireless fees and taxes, increasing the tax burden for wireless consumers more than 4 times as much as for other goods. In some states such as Nebraska, Washington, New York, Illinois and Florida, customers may pay over 17.2% in wireless taxes. For example, in Chicago, IL, the average wireless consumer may pay 24.38% in wireless taxes while the general business rate is 9.75%. Excessive wireless taxes have not only increased the consumers’ cost of service, but increased the tax burden disproportionately on lower income users sometimes discouraging seniors who are on fixed budgets from purchasing cell phones.
The Wireless Tax Fairness Act does not take away from any existing revenue that state and local governments receive. Instead, the bill calls for a period of tax stabilization as key stakeholders work together to determine what is best for consumers and the economy in regards to wireless services and taxes. During the period of tax stabilization, a 5 year moratorium will be placed on any new state and local discriminatory wireless taxes. In addition, state governments, the federal government, telecom industry and consumer advocacy organizations will work together to create a solution to address the existing high rates of taxation on the wireless industry. In response to the bill, Steve Largent, CTIA- The Wireless Association President and CEO stated,
“On behalf of the more than 300 million wireless users in the U.S., CTIA and our members appreciate Representatives Lofgren and Franks for reintroducing this important bill. With 144 bipartisan cosponsors, the Wireless Tax Fairness Act must be passed as quickly as possible to protect wireless consumers from any new and discriminating taxes and fees.”
U.S. Senators Ron Wyden (D-Ore.) and Pat Toomey (R-Penn.) recently introduced the Wireless Tax Fairness Act (WTFA) to the Senate. “Mobile voice and data services are not the luxury items they may have once been considered,” stated Sen. Wyden. “They are ubiquitous technologies that are more and more the primary way consumers access the Internet. Excessively taxing these goods and services stands in the way of innovation within the digital economy. There is no reason wireless tax rates should be on par with vice taxes like tobacco and alcohol. It is time to protect wireless services from unfair and excessive taxes.” Sen. Toomey stated, “Our bill will protect consumers from tax increases on wireless products and services. We need to let the internet economy thrive without being subject to a tax that is not imposed on other products or services.”
CTIA-The Wireless Association released a statement after the Wireless Tax Fairness Act was introduced in the Senate. “On behalf of the more than 300 million wireless users in the U.S., we hope the Senate moves quickly to put a freeze on these discriminatory taxes by passing this bill.”