WASHINGTON-The mobile-phone industry is fighting a bill on the Louisiana House floor that would scrap the existing telecom tax regime and replace it with an across-the-board 2 percent local excise tax, resulting in lower landline telephone taxes and higher monthly wireless bills.
The measure, sponsored by Rep. Cedric Richmond (D), continues a trend in states to compensate for declining telephone access lines and outdated tax models by tapping into the $100 billion cellular industry and its 190 million customers.
“The legislature hereby finds that the communications industry has become increasingly competitive and that the distinctions among the providers of the various types of communications services have become blurred. The legislature further finds that an inequity exists within the state as a result of the present manner in which various competing communications services are taxed,” the bill states.
“As a result,” the measure continues, “the legislature determines it essential and necessary to eliminate any inequity that exists in the taxing of communications services and to provide a source of funding to local government subdivisions by creating a special district and provide for it a source of revenue.”
Another House bill would require mobile-phone carriers to charge $1 to new customers who sign up for service after July 1. And yet another House bill would assess a new fee on wireless and other telecom consumers to help fund the state’s emergency first-responder network. The tax is separate from the existing 911 tax on wireless subscribers.
“Wireless users are facing a triple tax threat that could cause your monthly bills to skyrocket! Three separate bills have been introduced in the state Legislature that would hike wireless taxes to raise revenues for unrelated programs,” warns mywireless.org., an advocacy group created by the cellular industry to bring tax issues to consumers’ attention in hopes of securing their support.
The mobile-phone industry is facing similar local and state tax encroachment in Maryland, Oregon, Pennsylvania, Missouri and other states.
In Missouri, industry took a different tack and supported legislation allowing wireless taxes to rise to a maximum 5 percent. But that legislation, awaiting GOP Gov. Matt Blount’s signature, has two big sweeteners for wireless carriers. First, the wireless tax is capped and thus cannot skyrocket as taxes have in other states. In addition, the Missouri bill ends scores of lawsuits filed by various municipalities to collect what they considered back wireless taxes.
Last Monday at the Capitol Rotunda in Harrisburg, Pa., lawmakers, industry representatives and consumer groups held a rally urging a repeal of 5-percent state gross receipts tax on wireless services. The tax, passed by the Pennsylvania legislature in 2003, is in addition to the existing 6-percent state sales tax. The wireless industry said about 20 percent of wireless bills in the state are eaten up by wireless taxes, fees and government mandates.
“The regressive `double taxation’ caused by the state’s gross receipts tax on wireless service hits people on fixed incomes especially hard-including working families, seniors and small businesses,” said mywireless.org. “The GRT is also harming the state’s economy, by impeding job growth and reducing investment, especially in rural and underserved areas. In short, gross receipts tax on wireless service tax takes Pennsylvania a step backwards, by stifling economic growth, innovation and consumer benefits.”
The mobile-phone industry is pursuing legal, regulatory and federal legislative options to curb state’s ability to tax and regulate wireless carriers.
