Taxes on wireless telephone services across the country have reached a staggering percentage of consumer bills. Currently, consumers in 7 states pay over 20 percent in taxes on their wireless bills, according to an analysis done by the Tax Foundation, with consumers in 28 states paying over 15 percent. Taking into account all 50 states, the average consumer pays 17 percent in taxes on their wireless bill. This tax bill dwarfs the average sales tax across the country, with consumers paying a rate nearly two and a half times the national average for sales tax.
Often times states and local governments see wireless bills as an easy way for getting revenue — everyone feels they need a cell phone these days, and very few people tend to over over-scrutinize their bills — thus an easy way to increase revenue to government coffers.
Florida happens to be one of the worst states, with consumers paying over 22 percent on their wireless bills, with only three other states with a higher wireless tax burden. There’s currently a bill winding its way through the Florida legislature that would reduce the wireless tax burdens placed on consumers in that state. The bill would reduce Florida’s wireless tax burden by over $470 million dollars. That would save the average wireless consumer in Florida an average of $54 a year, an amount that can quickly add up for families with multiple family members on a plan. In an age where 56 percent of children aged 8-12 and 78 percent of teenagers have their own cell phones, this tax reduction would be a welcome relief for many families.
As the use of cell phones rise, it’s become more and more a necessity than a luxury for many people. According to one study, 40 percent of all households are now cell phone only. With the rise in reliance on wireless services, Congress has made attempts to ease the tax burden on consumers. Last session, Congress made an attempt to get a bill passed to prevent states and the Federal government from tacking even more taxes and fees onto consumer’s bills. Called the Wireless Tax Fairness Act, it would’ve placed a moratorium on federal, state and local governments imposing any new wireless taxes. That bill died before any action was taken.
Wireless taxes are regressive taxes that adversely affect low-income, minorities, young people and those who can least afford to pay such sky-high taxes. According to a Pew study, 40 percent of those with an income of $30,000 a year or less rely on their cell phone as their primary connection to the Internet, with 29 percent of those making between $30,000-$49,999 saying the same. The percentages get smaller as you go up the economic ladder, showing that low-income consumers rely on their wireless phones as an integral component of their lives. The same study shows that 38 percent of Blacks and Hispanics rely on their wireless phone as their primary gateway to the Internet, as compared to just 17 percent for Whites and non-Hispanics. The same goes for young people, where 42 percent of those aged 18-29 use their wireless phone as their primary gateway to the Internet.
The move in Florida to reduce consumer tax burden is a great sign, one that other state legislatures and Congress should be watching. With the increasing reliance on wireless phones for as a sole means of telephone communications and access to the Internet, it’s important that access be as unrestricted as possible, ensuring that even the least well off among us has access.
Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization. For more information, visit www.theamericanconsumer.org.