Discriminatory wireless taxation

Zack Christenson Research Fellow, American Consumer Institute
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The House today re-introduced the Wireless Tax Fairness Act, a bill that promises to end the skyrocketing rate of taxation on wireless phone bills at the state and local level.

The bipartisan bill, introduced into the House by Reps. Zoe Lofgren and Trent Franks, was previously passed in the House in 2011 before dying due to inaction in the Senate.

The bill would stop state and local governments from adding any new taxes onto wireless service bills for the next five years, offering needed relief for consumers already drowning in unfair and exorbitant tax bills.

Wireless consumers are currently up to their eyeballs in wireless taxes, a problem that doesn’t seem to be letting up as states have continually looked for new ways to plug budget holes. Nearly half of all states impose wireless taxes that amount to over 10% of the bill, with consumers in five states seeing tax bills over 20%.

The overall average rate of taxation on wireless bills amounts to around 17%, rising at least three times faster than taxes on any other goods or services. A big problem with these taxes is that they’re often a hidden cost to consumers.

The reality is that wireless bills can be so complex, with so many names given to the various taxes and fees assessed that navigating your bill can be nearly impossible.

Wireless phones are increasingly the main communication source for many consumers. That’s even more the case when it comes to young people, minorities and other low income consumers, who can’t afford the luxury of having both a wireless phone and a landline—and often don’t find the need for one.

According to a survey, 51% of 18 to 29 year olds have no landline. The same survey shows that 43% of respondents find their wireless phone more important to them than cable television or landline telephone service.

These numbers increase when you talk about minorities—48% of African Americans and 51% of Hispanics report that wireless service is a more important form of communication than landline or cable.

These wireless taxes are hurting most the people have least to spare—a discriminatory tax on low-income consumers if I’ve ever seen one.

These taxes are also harmful for those who use wireless services as their primary mode of connection to the Internet, an increasingly large number of US consumers. Many respondents to the survey (mentioned earlier)  reported using wireless service for work and education related purposes.

Thirty-two percent of respondents said they’ve used wireless Internet for work-related purposes, with 33% saying they use it for education purposes.

Again, consumers using wireless service as their primary means of Internet access are often the young, minorities, and low-income consumers. These wireless taxes are a huge impediment to getting everyone reliable access to the Internet, a goal of the countries National Broadband Plan.

With so much relying on the Internet today, be it education, commerce, or communication, we can’t afford to leave anyone behind, simply because states are looking for a new way to plug their budget through onerous and exorbitant wireless taxes.

Congress should act on this bill to stop any more potential harm to consumers. Congress doesn’t control the terrible tax codes found throughout many of the states, but it can stop these discriminatory taxes that are often shouldered by the people who can afford it least.

The wireless and tech sectors are growing sectors of our economy, and ones that we will rely on even more heavily in the years to come. Saddling the wireless industry and the consumers who consume those products with burdensome taxes and fees is a recipe for disaster.

Zack Christenson writes on digital tech issue for The American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization.  For more information, visitwww.theamericanconsumer.org.

Tags : wireless
Zack Christenson