WASHINGTON-A Blue Ribbon panel released a report last week that called for the telecommunications excise tax to be used to fund universal service.
“A current excise tax on telecommunications services, originally created a century ago to fund the Spanish-American War, now funnels revenue into the general tax fund. The amount generated by this tax, at slightly less than 3 percent of all telephony revenues, is the approximate size of the current Universal-Service Fund, and could be directed instead into the Universal-Service Fund,” reads the report of the Universal-Service Forum created by the Consumer Energy Council of America. The report details the work and recommendations of the Blue Ribbon Commission comprised of 50 public and private sector representatives who debated key questions as to the future of universal service through the last six months.
Using the 3-percent “Tax on Talking” to fund universal service was one of seven funding recommendations the group made. Most, if not all, of the recommendations require some sort of congressional action, said Robert Blau, vice president of executive and federal regulatory affairs for BellSouth Corp.
The telephone excise tax was first imposed to help pay for the Spanish-American War. The tax has been repealed before but it came back to finance World Wars I and II and increased to 10 percent during the Vietnam era. The tax was made permanent in 1990.
The Cellular Telecommunications & Internet Association first called for the repeal of the Tax on Talking in 1998 and last year language to phase out the tax was included in two pieces of legislation passed by Congress only to be vetoed by President Bill Clinton.
Using the funds generated from the tax for universal service would not be seen as an about-face for tax-cutting members of Congress because it has been so hard to repeal it, said Kathleen Wallman, chief executive officer of Wallman Strategic Consulting and chair of the CECA Universal-Service Forum.
“It is hard to get rid of a tax … maybe it can be put to a better use,” said Wallman.
The other funding options include:
Require Internet service providers to pay into the USF;
Include intrastate revenues (currently funding is limited to only interstate revenues);
Include support from services that impact telecommunications but may not be paying in;
Use general tax revenue;
Create a flat per-line assessment; or
Assess a per-number charge. The FCC is currently examining charging for telephone numbers as it looks for ways to conserve telephone numbers.
Notwithstanding calls from members of Congress from rural states to expand the definition of universal service to include broadband, the Blue Ribbon panel suggested that careful consideration and a go-slow approach be undertaken.
“The very strong chords of support for universal service is very important … the need to emphasize the stability of the fund and the viability of the fund going forward. … Any attempt to broaden the base of services that would be supported by universal service has to be taken as very deliberative. … This is an interesting contrast to about a year ago when there was a lot of energy and enthusiasm for starting the process of reviewing the definition of universal service early. … We need to be concerned about doing well those things we now have to do and we need to take a very methodical decision-tree approach about whether there can be an expansion of universal service,” said Wallman.
