Silicon Valley Lawmaker Seeks Wireless Tax Ban

Rep. Zoe Lofgren introduced legislation March 17 calling for a five-year moratorium on any new state or local discriminatory wireless taxes or fees. The Cell Tax Fairness Act (H.R. 1521) would not change any current state or local wireless taxes, nor would it ban any new federal taxes on cell phone services.

"By curtailing further increases on wireless taxes and fees, we hope to encourage additional consumer-driven development in wireless technology," Silicon Valley Democrat Lofgren said in a statement. "[The bill] does not take away any existing revenue for state or local governments, it simply calls for a period of tax stabilization."

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According to Lofgren's office, a typical consumer pays 15.2 percent in federal, state and local taxes on his or her cell phone bill as compared with 7.1 percent for most other taxable goods and services. Between January 2003 and July 2007, the effective rate of taxation on wireless service increased four times faster than the rate for other taxable goods and services.

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According to the principal cell phone trade group, CTIA, Americans paid nearly $21 billion in federal, state and local wireless taxes and fees in 2008.

"This legislation will ensure that consumers make choices about communications technology based on the merits of that technology, rather than on the rate of taxation," Lofgren said.

Trent Franks (R-Ariz.), a co-sponsor of the bill, added, "Due to the exorbitant rate at which cell phone taxes have been rising these past several years, current cell phone customers are already paying two to three times the amount of taxes that they pay on almost all other goods and services, for a product that is becoming increasingly important in technological innovation."

Previous attempts to ban new state and local taxes on cell phones have failed to come to a floor vote, blocked by local and state authorities.

"This pro-consumer legislation has gained tremendous bipartisan support, and we are pleased to see Congress moving ahead in the right direction to ease the tax burden on wireless customers," CTIA President and CEO Steve Largent said in a statement. "The Cell Tax Fairness Act will protect consumers from new discriminatory taxes and fees, but preserve existing revenue for states and localities."