A bipartisan bill introduced yesterday in the House and Senate seeks to put a five-year moratorium on taxes and fees for wireless services.
The Wireless Tax Fairness Act of 2011, which has garnered co-sponsorship from more than 140 House and Senate representatives, would impose the freeze on discriminatory taxes levied solely on wireless services.Federal fees would not be hindered but state and local ones would be subject to the moratorium.House representatives Zoe Lofgren (D-Calif.) and Trent Franks (R-Ariz.) introduced the bill, and in the Senate it was introduced by Sens. Ron Wyden (D-Ore.) and Olympia Snow (R-Maine).
“The current landscape of excessive and discriminatory taxes on wireless services discourages its adoption and use, especially with lower income families.” said Senator Snowe in a statement. “As wireless communications become a necessity for families and businesses nationwide, it is imperative wireless consumers are protected from the burdens of exorbitant fees, surcharges, and general business taxes.”
Authors of the bill pointed to the fact that the average consumer pays more than 16 percent in fees for wireless services when other taxable goods and services are only 7.4 percent. In many states, wireless fees exceed those of sin taxes.The Wireless Tax Fairness Act (WTF) 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.
The Cellular Telecommunications Industry Association (CTIA) also endorsed the bill. Steve Largent, president and CEO of CTIA, said in a statement, “This freeze would not take away any existing revenue for state and local governments, but would provide time so the localities can reform their existing tax systems.”
The bill would be a prudent move by congress. Wireless is already taxed by the federal government, so double and tripling up on the same services for revenues at the state and local levels results in exorbitant taxation. At the federal level, revenues from the tax are appropriated to services such as the USF. On state and local levels, they merely go into a general fund to offset unrelated costs. As Romina Boccia points out, citing researcher Scott Mackey, “By targeting telecom taxes instead of broad-based income or sales taxes, politicians can make their actions go relatively unnoticed, while continuing to raise taxes on virtually every citizen.”