Since 2006, the Senate has been trying to place a moratorium on new state and local cell phone taxes. The first proposal in that year died before reaching the floor for a vote. So did 2007′s Cell Phone Tax Moratorium Act, which was then followed into oblivion by the Cell Tax Fairness Act in 2008. Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME), the same Senators who introduced the last bill, have recently introduced a new one for 2009—the Mobile Wireless Tax Fairness Act. While most services are taxed at an average rate of 7.1 percent, wireless service taxes average approximately 15.2 percent. Aside from the fact that this is simply disproportionate and unfair, the bill’s sponsors argue that the higher tax rate has a greater negative impact on lower-income people because they rely more on cell phones for Internet access. Since lower-income people are also more frequently prepaid cellular customers rather than contract customers, the passage of this bill would not only benefit them, but prepaid providers such as Boost, MetroPCS, and Virgin Mobile. Prepaid customers and providers wouldn’t be the only ones to benefit, though. Verizon applauded the initiative, as did the Cellular Telecommunications Industry Association (CTIA), the lobbying arm of the wireless industry. According to the CTIA, U.S. wireless subscribers paid nearly $21 billion in taxes and fees in 2008 alone. They went on to say:
It is very troubling that wireless consumers have been taxed four times more than other taxable goods and services over an almost four-year period. The Wyden-Snowe bill will protect consumers from new discriminatory taxes and fees while preserving existing revenue for states and localities.
This new bill is essentially the same as the three that came before it. It seeks to place a five-year moratorium on new state and local wireless taxes. There are two important things to remember. It doesn’t affect any current taxes, either by reduction or abolition. Also, it doesn’t guarantee that new taxes won’t be levied at all. The bill would only prevent the wireless industry from being singled out for new, industry-specific taxes. Despite the fact that the bill has ardent and vocal supporters on both sides of the aisle, history does not lend much optimism to this new bill passing, or even making it out of committee for a vote. The economy is in much worse shape than it was in 2006, or even just this time last year. States will not easily relinquish such a large source of revenue, and those Senators seeking reelection next year will be trying to please their constituents. Still, it’s also a new administration and we’ve seen a lot of tumultuous changes already. If this new bill does pass, it will provide a modicum of relief to already overtaxed wireless customers.
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