Wireless telephone service seems to get cheaper all the time. In fact, the Cellular Telecommunications & Internet Association says the average monthly wireless bill has fallen 37% over the last decade. So why does it seem at the end of the month, cell phone service still costs as much as it ever did?
Taxes. The Heartland Institute’s Budget & Tax News reports in its January issue that taxes on cell phone service in the United States “have climbed nine times faster than those on general business since January 2003.”
In 19 states, the tax is in double digits. New York, which levies a stiff 21.7% duty on cell phone use, has the dubious distinction of imposing the highest rate (big surprise, that!).
Florida is not far behind with a 21.6% rate, followed by Washington at 21.52%, and Illinois at 21.05%. Nebraska (20.61%) completes the group of states that charge more than 20%.
There is an irony here. The government guarantees free speech, while also ensuring that speech isn’t free.
Is that good tax policy? The cell phone industry is an economic powerhouse. Cell phones provide low costs to consumers and offer more options than other telecommunications services. The wireless industry is constantly churning out innovations: phones keep getting lighter, smaller and thinner and the list of functions they perform continues to grow. It is an expanding industry, and a significant sector of the economy.
Look at it this way. How many politicians would seriously propose raising state sales taxes to 21%? And if they did, you would hear an outcry from the public about how badly the poor would be hurt by such a regressive tax.
Yet that is exactly what they are doing to people with cell phones. And they will continue to do so until an outraged public goes to the voting booths and says “Can you hear me now?”