If you like taxes, you should love the wireless phone industry!
One of IPI’s fundamental principles of tax reform is transparency. In a nontransparent system, politicians can slip in lots of taxes and regularly increase the rates without individuals ever knowing they are getting dinged.
And your wireless service is subject to one of the most nontransparent tax systems we know.
According to a new study published in State Tax Notes, the combined federal, state and local taxes and fees (as of July, 2007) on wireless service range from 22.54 percent in Nebraska to 5.85 percent in Oregon.
Do Nebraska wireless-service consumers know that they are paying the highest wireless taxes in the country? Of course not.
Do Oregon consumers know they are paying the lowest rates? Of course not.
No one knows. And trying to wade through all of those tax inputs in the monthly bill is daunting.
So most consumers look at their wireless bill, see the list of taxes, say “whatever,” and let it go.
And that’s why politicians like taxing the wireless industry. That’s why the average wireless customer pays more than twice (15.2 percent) as much as the average sales tax imposed on competitive goods and services (7.1 percent).
Yes, taxes on communications did decline somewhat in 2006 when the federal government eliminated a 3 percent federal excise tax. Did you know that?
But communications taxes have been creeping back up as states have expanded them. Did you know that?
Precisely our point. People don’t know who is charging them what. And if they did, they might get mad—really mad.
It is time to make wireless communications taxes and fees more transparent. Consumers need to know that their wireless bills are higher than necessary because of a load of hidden taxes.