US Bill Proposes State Wireless Tax Moratorium

by Mike Godfrey, Tax-News.com, Washington

23 December 2015

Zoe Lofgren (D – California) and Trent Franks (R – Arizona) have re-introduced the bipartisan Wireless Tax Fairness Act, which was previously passed by the US House of Representatives in 2011.

The proposed legislation would not reduce or remove any existing revenue from state or local governments. It would impose a temporary, five-year freeze at current rates on new state and local taxes levied solely on wireless services, but would not prohibit additional taxes on wireless access provided that the same tax rate is applied to other goods and services.

Lofgren and Franks noted, on average, wireless customers pay nearly 18 percent in taxes and fees. They hope that, with wireless broadband access rapidly becoming a key platform for innovation, the proposed bill will help foster greater access and investment in this key market by halting discriminatory and increasingly onerous tax treatment.

"Wireless connectivity is one of the simplest and easiest routes to the Internet, but rather than encouraging wireless growth, we've burdened it with taxes," said Lofgren. "It's time to hit the pause button on any further discriminatory taxes. This will help boost job growth and innovation."

Frank added that "exorbitant taxes on wireless customers are discriminatory, adding costly impediments to the success of so many American businesses and affecting low-income and senior Americans who frequently rely on wireless service as their sole means of telephone and internet access."

The present taxes and fees that wireless customers pay is more than twice the 7.5 percent average rate on goods and services. In many localities, this cumulative tax burden is even higher. For example, the wireless tax rates are as high as 36 percent in Chicago, 29.9 percent in Baltimore, 26.9 percent in New York City, 26 percent in Omaha, and 22.4 percent in Tallahassee.

The Tax Foundation has calculated that wireless consumers pay around USD5.8bn annually in state and local taxes and fees in excess of the normal state and local sales taxes imposed on the purchase of other goods and services.

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