Call to Lower Taxes on US Cellphones

Many Americans might be feeling the pain of writing checks to beat the tax filing deadline, but for nearly 200 million Americans, the ever increasing rate of taxes and fees on their wireless service is causing them year-round heartburn.

Currently, nearly 17% of the average monthly wireless bill goes to cover federal, state and local taxes and fees, and in some cases, consumers are being walloped with an average tax burden of more than 20%. The taxes and fees consumers are forced to pay in New York, Florida, Illinois, Nebraska and the District of Columbia all exceed the 20% level.

But while the average wireless tax burden hovers around 17%, the average tax paid on other goods and services stands at only 7%. In fact, since 2003 the tax rate on wireless service has increased nine times faster than the rate on other goods and services.

"Wireless consumers are taking it on the chin," said CTIA-The Wireless Association President and CEO Steve Largent. "Today, we are calling on all levels of government to cease and desist - the 182 million wireless subscribers in America shouldn't have to carry more than their fair share of the tax burden."

Indeed, American wireless consumers are becoming more and more aware of the excessive tax burden they are forced to shoulder. This past November, 72% of California voters rejected a ballot initiative that would have drastically increased taxes on wireless users. Earlier this year, ABC's award winning news program 20/20 featured a segment on the trend to tax wireless and concluded it was one of the top 10 "nastiest behaviors" in America today.

And while taxes have been on the rise, wireless prices have been in decline. According to the Federal Communications Commission (FCC), the price of a wireless minute dropped by an overwhelming 81% between 1994 and 2004. At the same time, consumers increased their consumption of wireless minutes by more than 300%. Competition in the wireless marketplace has delivered more and better services at lower cost.

"This is not the kind of give and take that consumers should be happy about," continued Largent. "The wireless industry is giving consumers better service and products and more minutes at lower cost, while governments are taking more and more money for taxes and fees. Government has unfairly viewed falling wireless prices as an opportunity to raise taxes. The steep increase in wireless taxation over the past several years has wrongly prevented consumers from realizing the savings they deserve. The good news is that consumers are taking notice and sending a clear message to policy makers - stop taxing my wireless phone."

Posted to the site on 18th April 2005