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Equity for All

Fri, 02/02/2007 - 4:51am
The debate about America’s telecommunications future will continue in 2007. U.S. Representatives, Senators and FCC Commissioners will take another look at the Telecommunications Act of 1996 and laws governing communications services, including wireless.

An indication that things may be heading in a positive direction was the recent introduction of the Cell Phone Tax Moratorium Act of 2007, introduced on January 4th in the 110th Congress. The intent of this bill is to reduce the unfair and excessive taxes and fees on wireless services, which have been levied on wireless consumers over the last few years.

Today, the average general sales tax in the U.S. is approximately 6%, compared to approximately 17% the average wireless consumer pays in taxes and fees for monthly services. Without a doubt, wireless consumers are being discriminated against and ironically are being penalized for embracing the technology and all it has to offer. Fortunately, consumers are becoming wise to this situation and are beginning to voice their discontent in a powerful way. For a while, I don’t think most of us realized what percentage of our monthly bill was allocated for local and state taxes. It just slowly crept up on our bills without appearing to be very significant. I, for one, did not know the exact amount I was paying in state and local taxes for my wireless service; however, I did notice that every few months or so another line item appeared on my bill with a dollar amount across from it.

The imposition of taxes and fees on wireless service starts at the federal level with the Universal Service Fund (USF) fee and the Federal Excise Tax (FET). The FET, originally passed in 1898 as a way to fund the Spanish American War, was extremely antiquated. Finally, in 2006, after much effort and determination by a number of organizations and consumers, the Department of Treasury announced that the IRS will no longer collect FET after July 31st 2006 and that consumers will be able to claim refunds on their tax returns for 3 years worth of FET payments.

Currently, each of the 50 states can govern wireless 50 different ways. That means there are hundreds of separate state taxes, laws and regulations in states and cities across the country, thus creating a myriad of costly wireless over regulation and taxation. What is the result of this situation — less innovation and consumers will suffer. The money that needs to be set aside for such taxes is money that is no longer available to buy services, which will eventually impact the pace of technological development.

Congress and the FCC can improve this situation. With one equitable and consistent national policy for national wireless, policy makers can get wireless consumers out from under such unfair, over charging, appreciate the industry for what it represents in terms of our economic growth and allow the more than 225 million Americans to stay connected. Become active — urge your elected officials to support meaningful telecommunications reform. You can contact to make your voice heard.


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