Digital Use Explodes While Wireless Taxes Steadily on the Rise

Digital Use Explodes While Wireless Taxes Steadily on the Rise

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Around the world, the use of mobile devices – whether cell phones, smartphones, or tablets – is on the rise. In fact, when it comes to accessing the Internet, for the first time in history, mobile use (51.2%) now exceeds desktop browsing (48.7%), and this uptick in portable engagement shows no signs of slowing anytime soon.

The challenge now is that at the same time mobile use is increasing wireless taxes remain steadily on the rise. According to a report recently released by The Tax Foundation, wireless taxes are increasing for the second year in a row.  The report by Scott Mackey and Joseph Henchman entitled Wireless Tax Burdens Rise for the Second Straight Year in 2016 explains “taxes and fees on wireless consumers increased to a record high 18.6% of the average U.S. customer’s monthly bill. In just two years, the average wireless tax burden has increased by 1.5 percentage points, and wireless taxes are now 4.5 percentage points higher than they were ten years ago.”

So what does this mean for the average consumer? Well, even as wireless providers are competing against each other for new business, causing wireless rates to fall, people are missing out on substantial savings to their monthly bills because wireless taxes and fees are steadily on the rise.

Mackey and Henchman report that “[s]ince 2008, average monthly bills have dropped from just under $50 per month to $44.65 per month – an 11% reduction – while taxes and fees have increased from 15.1% to 18.6% – a 23% increase.” The duo also contend that consumers pay an estimated $17.2 billion a year in taxes and fees alone, broken down as follows:

  • Sales Taxes + Broad Consumption Taxes: $7.0 billion
  • Federal Universal Service Fund (FUSF) Surcharges: $5.1 billion
  • 911 Fees: $2.5 billion
  • Other State and Local Taxes, Fees, and Surcharges: $2.6 billion

With cost still a major concern for people when it comes to their use of wireless technologies, the increase in taxes on monthly bills is becoming a burdensome extra expense, especially for those who can least afford those extra costs. As state and local governments in particular look to ways to raise money for their annual budgets, wireless services and products should be viewed as an outlet of last resort for additional taxation, especially since the consequences of increased wireless bills could result in real consumer harm.

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