Bill Would Stall Cell Phone Taxes

Legislation calls for a five-year ban on additional state and local wireless taxes.

Silicon Valley lawmaker Zoe Lofgren, D-Calif., marked tax week with the introduction of federal legislation to impose a five-year moratorium on any additional state or local wireless taxes. The bill would not apply to taxes or fees aimed at subsidizing emergency 911 services.

On average, consumers currently pay 15.19 percent in federal, state and local taxes on their cell phone bills. According to a new CTIA study examining taxation trends, Americans pay 7.1 percent in taxes on goods and services other than wireless services. Between 2003 and 2007, taxes and fees on wireless service increased four times faster than taxes on other goods and services.

"The Cell Tax Fairness Act will help ensure that consumers make choices about communications technology based on the merits of that technology, rather than on the rate of taxation," 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 that will help further innovation and access in the wireless world."

The bill is similar to legislation introduced in the Senate last year by Sen. John McCain. The bill has not had a hearing and is not expected to reach the Senate floor before the 110th Congress adjourns later this year. McCain backed the same measure in the 109th Congress as part of a massive telecommunications reform bill that ultimately failed.

CTIA rushed to praise the legislation.

"With about 15 percent of each customer's monthly bill already going to taxes and fees, increasing discriminatory and unfair taxes on wireless customers presents a clear and present danger to future growth," Verizon Wireless President and CEO Lowell McAdam, CTIA's chairman, said in a statement. "Policymakers should roll back taxes on wireless customers."

Kimberly Kuo, executive director of added, "American wireless consumers still pay over 15 percent on average in combined monthly wireless taxes, fees and surcharges. In these uncertain economic times, hundreds of millions of American wireless consumers and their families deserve a break from excessive taxes on communicating."