A bill to prohibit already high cell phone taxes from going up even further has cleared its first Congressional hurdle today, passing out of a House Judiciary subcommittee. The Cell Tax Fairness Act places a mandatory five year break on all new, discriminatory state and local wireless taxes.
The move is certainly a welcome one. States have increasingly targeted cell phone service for revenue to cover overspending problems, mostly out of fear that broad based tax hikes anger voters. These taxes have spiraled out of control to the point where the average consumer pays 15% in taxes on wireless service. ATR’s Center for Fiscal Accountability has also calculated that after accounting for all telecom taxes, as well as other federal, state, and local taxes and fees, consumers across the country already spend 46.4% of their cell phone bill just paying for the cost of government.
Roughly 90% of Americans have cell phone service, yet high taxes on wireless service discourage further mobile usage by raising prices for consumers. Ideally tax rates on mobile services should be no higher than the tax on other goods and services. While the bill doesn’t force states to lower their rates, it does freeze them from going any higher. Hopefully the House and Senate will get around to passing the measure before next year’s state budget fights start up again.
Click here for a copy of ATR’s letter earlier this year in support of the bill.