Taxes, Fees and Surcharges

Key Points

  • On average, consumers pay more than double on taxes and fees for their wireless service than on other general goods and services. CTIA and its member companies support a fair and reasonable tax rate that would be no higher than what’s imposed on other taxable goods and services.
  • This excessive and discriminatory taxation hurts those who can least afford communications services, and is directly opposed to policymakers’ efforts to ensure affordable broadband access for all Americans. That’s why we advocate for legislation that creates a reasonable and clearly defined wireless tax and fee structure.

CTIA Position

With many state and local governments facing significant budget shortfalls, some have chosen – and continue to choose – to levy taxes and fees on wireless consumers since they are reliable bill payers and wireless providers are consistent bill collectors. Unfortunately, this discriminatory and regressive tax and fee structure led to the current situation of more than 17 percent average in wireless taxes and fees per month, which is more than double the average sales tax for other goods and services (about 7 percent).

With these excessive taxes and fees on wireless, affordable broadband access for all Americans, especially low-income and minorities, is challenging, especially since wireless devices may be their only connection to the Internet.

That’s why CTIA and its member companies continue to advocate for legislation that would ease the taxes and fees solely imposed on wireless products and services. At the federal level, that includes:

  • Wireless Tax Fairness Act: Would place a five year moratorium on any new and discriminating taxes and fees on monthly wireless consumers’ bills.
  • Digital Goods and Services Tax Fairness Act: Would provide clarity for policymakers, the wireless industry and consumers on wireless taxes by setting up a national framework for imposing state and local taxes on digital goods and services such as apps and e-books.
  • Internet Tax Freedom Forever Act:  Would permanently extend the tax moratorium on broadband services, including wireless access, and provide a clear and reasonable tax structure on electronic commerce.

Consumers in 47 states and the District of Columbia currently pay a monthly wireless tax, fee and government charge rate that exceeds the general rates on retail sales taxes for other goods and services. The following states impose taxes, fees and surcharges exceeding 17 percent of the bill:

  1. Nebraska (24.49%)
  2. Washington (24.44%)
  3. New York (23.67%)
  4. Florida (22.41%)
  5. Illinois (21.76%)
  6. Rhode Island (20.50%)

  1. Missouri (20.11%)
  2. Pennsylvania (19.95%)
  3. South Dakota (18.95%)
  4. Kansas (18.93%)
  5. Arizona (18.80%)
  6. Maryland (18.59%)
  1. Utah (18.49%)
  2. Texas (17.97%)
  3. Alaska (17.91%)
  4. Tennessee (17.45%)
  5. Washington, DC (17.44%)
  6. Arkansas (17.36%)
  7. Oklahoma (17.30%)

CTIA is working at the state and local level to prevent additional discriminatory and excessive taxes and fees on wireless consumers.

We are pleased the consumer-friendly wireless tax measures of the MOBILE Cellphone Act of 2009 (H.R.690) and its companion bill (S.144) passed into law in September 2010. This legislation amended an antiquated Internal Revenue Service (IRS) Code that required employers providing employees with wireless devices to either treat the cost of the phone as a taxable benefit or require employees keep ridiculously complicated paperwork documenting the purpose of every call.

Last Updated: November 2013

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