Mobile Future

Congress taking on cell taxes

Cross-posted from Huffington Post

Representatives Zoe Lofgren (D-CA) and Trent Franks (R-AZ) recently introduced a bill in Congress which could positively impact the millions of consumers of wireless communications in the U.S. and increase the job security of hundreds of thousands of mobile and wireless industry workers. The Cell Tax Fairness Act would prohibit any state or local tax that singles out your wireless service for the next five years.

By addressing the horribly regressive nature of wireless taxes, this bill could promote progress with larger social and economic problems:

  • Stopping the growth of regressive taxes could spur greater cell phone use, which, in turn, increases economic opportunity.
  • Regressive taxes affect the poor more so than any other group, so this bill directly helps lower-income Americans.
  • Given that wireless broadband is the country’s fastest growing high-speed option, this bill could help close the digital divide by making the service more affordable to those without other options.

If you’ve looked at the bottom of your wireless bill recently, you understand what a good idea this is: today, state and local fees average nearly 14 percent of mobile phone bills. That’s almost double the cost of ordinary sales taxes.

Even worse, there is a new trend in state legislation to increase taxes on wireless service. In 2007, Missouri cities successfully got courts to impose new “business license taxes” on wireless services at rates as high as 10 percent, even though other business license taxes are typically about one percent. More recently, cities in California have been rewriting utility regulations to expand the list of wireless services that can be taxed.

Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME) introduced a similar bill last year, and hopefully, they will continue their work to limit wireless taxes in the Senate.

Finally, these efforts bring up an important issue for progressives. Mobile services are a great equalizer in America. In this environment of financial stress, when millions of Americans need more – not less – access to the communications and data services provided by their cell phones – government should be doing all it can to encourage investment, innovation, and access. New regressive taxes will only negatively impact these cornerstones of our economic recovery.

Jonathan Spalter, chairman of the Mobile Future Coalition, served as chief information officer at the United States Information Agency during the Clinton administration.