In addition, the job of collecting and remitting taxes to all the local jurisdictions has been burdensome for the wireless carriers. There are approximately 7,000 communities that have some type of wireless taxes, but when you add in special taxing districts (fire, school, library, etc.) that have a separate assessment it means that wireless providers may have to deal with as many as 30,000 distinct jurisdictions when figuring out tax bills.
Fast and easy tax collection
Why has wireless service become a favorite tax target for local jurisdictions? “Local government’s first response to a budget shortfall is usually ‘Who can we go to that collects money for us easily and efficiently and that we can turn to with a fair degree of predictability?’,” says Dan Piekarczyk, Tax Counsel, T-Mobile. Wireless service, with its growing customer base, offers the potential for increasing revenue, and the administrative work of collecting the tax is easy because there are a limited number of service providers in each area.
Legislators know that many consumers aren’t even aware of cell phone taxes. That’s because of tax creep — taxes go up in small increments over a period of several years — and because many customers use services such as automatic bill pay, so they don’t even look at their cell phone bills.
Finally, the wireless industry itself was behind the times in education and lobbying efforts. “Wireless has not historically been an industry with a big state lobbying presence,” Canning notes. “The resources of the companies have been focused on two things: innovation to bring new and better products to consumers; and deployment of infrastructure so as many customers as possible can be reached with the best technology.
“So the wireless industry was caught flatfooted when the industry was no longer flying under the radar; we didn’t have the resources in place to gear up to fight these new taxes.”
Fighting back
In recent years the wireless industry has taken the initiative to educate wireless consumers about the extent and the effect of the tax burden they are carrying through Web sites (MyWireless.org), television and radio ads and bill stuffers. In addition, some normally competing groups within the telecommunications industry (wireless, wire-line and cable companies) have banded together to form CorrecTaxes, a coalition that will work to lower telecommunications taxes. These diverse efforts seem to be paying off.
