Senate Bill Calls For Hiatus On Wireless Taxes

by Leroy Baker, Tax-News.com, New York

10 June 2009

A bill has been introduced into the United States Senate to enact a five-year moratorium on new or increased taxes on wireless telecommunications infrastructure and services.

The ‘Mobile Wireless Tax Fairness Act of 2009’ has bipartisan support and was introduced by Senators Ron Wyden, an Oregon Democrat, and Olympia Snowe, a Maine Republican.

Wyden said the legislation will keep taxes on telecommunication products and services, which he says are already on par with “vice taxes” on tobacco and alcohol, from “spiralling out of control.”

“Wireless technology is becoming faster, more reliable, and able to get into the hands of more and more Americans,” Wyden said. “This legislation will keep American companies competitive by putting the brakes on unfair wireless tax increases -- allowing American companies to remain leaders in innovation and making it easier for Americans to afford these services. We can’t allow the cell phone to be the next bare necessity that simply becomes too expensive to own.”

The Senators say that while the average tax rate for goods and services is 7.07%, the typical consumer pays 15.9% of their total wireless bill in federal, state and local taxes. Furthermore, they point out, the effective rate of taxation on wireless services increased four times faster than the rate on other taxable goods and services between January 2003 and January 2007.

The Mobile Wireless Tax Fairness Act would prohibit state or local governments from imposing any new discriminatory taxes on wireless services or products that is not applied to other products or services for a period of five years. As a result, the Senators argue, American telecommunications companies would keep pace with foreign competitors and provide better services and products to consumers, such as the 4G network standard, which the industry is currently in the process of installing.

"As more and more Americans rely on wireless technology – in some cases even abandoning the use of land lines all together – we must ensure no new taxes are levied against the use of their mobile phones," said Sen. John McCain, who has long fought to prevent taxes being imposed on internet access.

“Cell phones and wireless devices are increasingly a necessity for our personal and business uses,” added Sen. Robert Menendez. “We should not allow excessive taxes on technology to slow innovation.”

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