Can You Hear Us Now? Time to Pass the Wireless Tax Fairness Act

Michi Iljazi

June 13, 2013

There is no question that consumers are overtaxed in today’s marketplace and the need for relief is always a welcome piece of news. This week, the House reintroduced the Wireless Tax Fairness Act (WTFA) and the Taxpayers Protection Alliance has supported this bill that is aimed at protecting consumers from targeted tax increases on wireless services.

The newly minted WTFA from Rep. Zoe Lofgren (D-Calif.) and Rep. Trent Franks (R-Ariz.) would give wireless customers a break from excessive state and local government taxes on cell phones and the bill enjoys bipartisan support with over 100 members cosponsoring the legislation. WTFA wouldn’t require any states to give up revenue earned, but what the bill would do is place a moratorium for 5 years, where all stakeholders would work together to figure out exactly which path to take on wireless taxes that would be beneficial to all parties involved (consumers, businesses, state/local governments. The legislation also calls for the very same stakeholders to find a solution to address the already high tax rates burdening the wireless industry.

This legislation is needed and one look from statistics from the Institute for Policy Innovation (IPI) shows that the average rate of taxation on wireless consumers is nearly 17 percent with almost half of the states impose wireless taxes at a rate of greater than 10 percent of the wireless bill. Some states even hit consumers with a rate of more than 20 percent; this is unacceptable and many times when a consumer reviews their cell phone bill, they can’t even figure out where the taxes are coming from as they are buried in “hidden costs,” which lack specificity. Unfortunately, the absence of legislation that calls for a solution or a stay in increasing rates has proven costly to consumers with taxes on wireless increasing four times fast than those on any other good/service.

The city of Baltimore is an excellent example where taxes add more than 27 percent  to wireless bills. In Chicago, wireless customers pay a total tax rate of nearly 25 percent, and in New York City the rate is higher than 20 percent for wireless customers. As wireless taxes are increasing four times faster, you could have a realistic situation where the service plan cost is less than the amount of taxes being paid for the services. This is an absurdity and the regressive nature of these taxes is a real problem for consumers, especially 18-29 year olds, with more than half of them having no landline their cell phone has become an increasing important necessity to their daily lives.

The bill has been greeted with open arms and support has been immediate with key groups and individuals making their position known:

“On behalf of the more than 300 million wireless users in the U.S., CTIA and our members appreciate Representatives Lofgren and Franks for reintroducing this important bill. With 144 bipartisan cosponsors, the Wireless Tax Fairness Act must be passed as quickly as possible to protect wireless consumers from any new and discriminating taxes and fees.”–Steve Largent, President and CEO, CTIA- The Wireless Association

“In the meantime, the Wireless Tax Fairness Act, newly reintroduced this week, would put a five-year moratorium on any new state and local discriminatory wireless taxes. Smart states could use this time to do a complete rethink on the way they tax communications services. At the very least it would stop states from applying even more new discriminatory taxes on the crucial wireless industry.”–IPI President Tom Giovanetti

This is an issue and a fight that has been going on for more than a decade, back when the National Governors Association (NGA) and the National Conference of State Legislatures (NCSL) urged states to reform and modernize their wireless taxes. The key question now becomes will this bill be able to generate the same support as it did in 2011 when it passed? And will the Senate listen to the stakeholders including millions of consumers nationwide who are looking for relief to the constantly and inexplicable increasing taxation on their wireless services? The Taxpayers Protection Alliance urges the House to move quickly and pass H.R. 2309, the Wireless Tax Fairness Act of 2013and we also urge the Senate to take up similar legislation as soon as possible… can they hear us now?