Today, CTIA and six wireless providers, which collectively serve almost 94 percent of America’s 322 million wireless subscribers, delivered a letter urging Senate Committee on Finance Chairman Max Baucus and Ranking Member Orrin Hatch to act on the Wireless Tax Fairness Act (S. 543) and the Digital Goods and Services Tax Fairness Act (S. 971).
These two bills, if enacted, would provide wireless customers some much needed relief from a tax system that today discriminates against wireless consumers.
Right now, wireless customers are being charged sometimes as much as four times more in taxes and fees by state and local governments for no other reason than because they have wireless devices. The average tax rate for typical goods and services is 7.4 percent, but for wireless service, the average is more than 16.3 percent. Wireless customers in 47 states and the District of Columbia currently pay a monthly wireless tax, fee and government charge rate that exceeds the general rates on retail sales taxes for other goods and services. As the letter notes, “The disparity between taxes on wireless services and other goods and services imposes an unfair and regressive burden on lower-income Americans who disproportionately rely on wireless service for both telephony and Internet access.” That makes no sense in an age in which mobility and access to the Internet are table stakes for economic participation. Quite simply, this is why the Senate needs to pass the Wireless Tax Fairness Act.
And the great thing is that while passing the Wireless Tax Fairness Act the right thing to do for customers, it will not cost the federal government anything. Last year, prior to the House’s unanimous approval of the bill, the C.B.O scored the bill at zero additional cost to the federal government. C.B.O. also found that the bill would not reduce the revenues collected by state and local governments. If it doesn’t cost government anything and while benefiting consumers, there’s no reason not to act and more than 300 million reasons why Congress should!
While we strongly support enactment of the Wireless Tax Fairness Act, Congress shouldn’t stop there. It also needs to act in order to ensure that if digital commerce is to be taxed, that taxation must be done in a rational manner.
One of the great benefits of wireless technology is that consumers can download music, books and all sorts of applications to their devices at anytime and anywhere. Unfortunately, there is a lack of clarity today regarding how these mobile downloaded purchases should be taxed. That’s why the Digital Goods and Services Tax Fairness Act is important for customers. It would provide a national framework for the application of state and local taxes on downloaded goods. Why should an in-store purchase of a book be taxed less than if a customer purchases the same book via a smartphone or tablet? When customers download these items, they should know who is taxing them and how much. When the Mobile Telecommunications Sourcing Act became law in 2000, it created a national framework to govern the way mobile service is taxed. The Digital Goods bill would do the same thing for downloads. It’s a common sense thing to do, and again, it won’t cost the government anything.
We urge the Senate to move as quickly as possible on these bills so that America’s wireless users can get some much needed relief and clarity on their wireless taxes and fees.
If you want to find out where your state ranks on monthly wireless taxes and fees, please visit CTIA’s advocacy group’s website, MyWireless.org.