WASHINGTON-The mobile-phone industry is backing a bill in the Missouri legislature to raise wireless taxes in exchange for eventually capping the tax at 3 percent and ending a slew of lawsuits filed by municipalities to collect back taxes from cell-phone operators.
The mobile-phone industry faces new state and local taxes across the country, but in most cases, wireless carriers are fighting-in many cases, in court-to turn back wireless fees. Not so in Missouri where the wireless industry and SBC Communications Inc. have funded a media campaign supporting the measure.
“I would like the litigation to stop,” said Rep. Shannon Cooper (R).
The state House passed the Cooper bill two weeks ago. This week, the Senate committee on economic development, tourism and local government is scheduled to take up the measure. If the panel approves the bill, which industry lobbyists expect, it would then go to the Senate floor for debate.
But time is running short. Missouri’s General Assembly ends its session May 13.
“My biggest enemy is time,” said Doug Galloway, a director of government affairs for Sprint Corp., parent of Sprint PCS.
Despite the fact it would raise wireless taxes, the Cooper legislation is crafted in such a way as to not conflict with a state law requiring a public vote on proposed tax increases.
Various cities, fearing a loss in revenue, oppose the bill and could entice Senate lawmakers to filibuster the legislation until time runs out in the legislative session. Cooper said those municipalities do not understand the changing marketplace dynamics, one in which landline use is dropping while wireless access is increasing. While wireline taxes will drop significantly, wireless taxes will increase to a maximum 5 percent in 2006 and then drop to a maximum 3 percent in 2008.
As such, according to bill supporters, many rank-and-file citizens-those who have both wireline and wireless phones-will not notice any change in the amount of taxes they pay. It will be a wash.
“From a wireless industry perspective, we’re not opposed to paying our fair share,” said Galloway. But, he added, business license taxes on phone service running as high as 11 percent discriminate against telecom consumers. “This is a consumer bill,” said Galloway.
Newspaper ads urge telecom subscribers to get behind the Cooper bill, a strategy the mobile-phone industry is experimenting with as it battles wireless taxes in various states.
A big benefit for the wireless industry is a provision in the bill to terminate all pending lawsuits cities have filed against cellular carriers to collect back taxes. But there are sharp differences among stakeholders about whether municipalities even have legal authority to levy fees on wireless carriers, which subsequently pass them on to subscribers.
There are 600 municipalities in Missouri. Cooper said 10 percent of them either have sued wireless carriers or plan to do so.
On a related front, the cell-phone industry has urged a key state lawmaker in Oregon to oppose a bill that would impose up to a 5-percent tax on wireless service and other telecom offerings.
“Utility-type tax proposals like the one being considered in Oregon only serve to punish consumers who have opted to become wireless subscribers because of lower prices and innovative service offerings, said CTIA President Steve Largent in an April 20 letter to Sen. Ryan Deckert (D), chairman of the Senate Revenue Committee. “If enacted, this bill would require the average Oregon wireless consumer to pay about $30 per year in new taxes. While this may amount to a windfall for Oregon cities, it is certainly a sizable tax increase for your constituents.”
The bill would allow telecom carriers to keep 3.25 percent of taxes collected.
