Wireless Consumers Need a Break on Wireless Taxes

This morning the House Judiciary Subcommittee on Commercial and Administrative Law held a hearing on the “Cell Tax Fairness Act of 2009” (H.R. 1521) to examine current local and state tax rates and fees imposed on wireless service. While the complete line-up of panelists who testified at the hearing can be found here, I’d like to focus on the testimony of Indiana State Representative Mara Candelaria Reardon and Florida State Representative Joseph Gibbons. 

The overall tone from the hearing was positive and it was great that Reardon and Gibbons repeatedly mentioned that wireless users are unfairly taxed. For the past four years, wireless products and services have been taxed four times more than other taxable goods and services. This makes no sense in an economy that is increasingly mobile and information-driven. 

Representatives Gibbons and Reardon made the important point that wireless taxes are regressive in nature, with Gibbons pointing to a compelling statistic from the Center for Disease Control’s annual survey that illustrates how high wireless taxes place the greatest burden on those Americans who can least afford it. According to the CDC, adults living in poverty (21.6%) were more likely than higher income adults to be living in wireless-only households. These folks deserve a break. 

Reardon commented that access to wireless services is no longer a luxury for a select few, but rather a vital necessity for more than 270 million Americans, and especially for those facing economic challenges. When taking into account how important wireless services have become to consumers, taxing these services at such an excessive level doesn’t make sense. That will be even more true in the future, as the mobile device continues its evolution from being a phone into a handheld computer that promises to radically expand consumers' access to electronic commerce, health care solutions, education and opportunities for civic participation.  

Finally, Reardon also addressed the claim that state and local governments would miss out on critical revenue generated from wireless taxes and fees. This is a complete red-herring advanced by opponents of sensible tax policy. The reality is that H.R. 1521 preserves existing state and local revenue streams and does not take away any existing revenue from state and local governments. Instead, this bill will put a 5-year moratorium on new discriminatory taxes and fees from being added to what’s currently imposed on consumers.   
 
This is a very modest ask, and one on which we hope the Congress will act swiftly.