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New Report Highlights Need for Communications Tax Reform

Why are wireless consumers paying twice as much in taxes and fees?

WASHINGTON Feb. 14, 2011 Scott Mackey A Growing Burden: Taxes and Fees on Wireless Service,

three times faster

"The wireless industry and its customers are willing to pay their fair share of taxes, but it is unfair for wireless consumers to pay rates two times higher than rates on other taxable goods and services," said Mackey. "There is no sound policy reason to tax wireless and other communications services at these high rates.  In fact, at a time when the President, Governors, and business leaders are calling for expansion of wireless service to improve productivity, these excessive taxes actually discourage business and consumer purchases of wireless service and reduce the availability of funds for network modernization."

The study found that consumers in 47 states now pay wireless taxes, fees, and government charges that exceed the general retail sales tax rate. The average consumer pays over 16 percent of their wireless bill in federal, state and local taxes, fees and surcharges. For other goods and services, the average tax rate is only 7.4 percent. Wireless tax rates in many states have hit double digits, with some states double taxing consumers by imposing a gross receipts or excise tax on wireless communications in addition to the general sales tax.  

"Consumers who rely on basic communication services – typically lower-income consumers – are the ones most harmed by excessive wireless taxes, which are very regressive," continued Mackey. "Reform of these antiquated tax systems would lower costs to businesses and consumers, expand the use of advanced wireless services, and help create jobs by making the American workforce more productive.  Reform of wireless taxes would also expedite the build-out of advanced wireless networks."

A Growing Burden:  Taxes and Fees on Wireless Service

Scott Mackey New York Times


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