In the midst of rising taxes across the country, including new taxes that are driving companies out of some states a few politicians are trying to end the century-old practice of loading up communications with a heavy, discriminatory and disproportionate tax burden.
In Louisiana, the Senate recently stopped a scheme cooked up by the attorney general to grow his office budget by hiking taxes $2.4 million a year on Internet access. The state already taxes communications in a highly discriminatory way. For example:
- Win big in Shreveport and pay a 6 percent tax on your gambling winnings;
- Buy a bottle of wine in Lafayette and pay 8.0 percent;
- Or buy pornography and pay up to 9.75 percent;
- But check an email on your mobile phone and pay … 10.58 percent.
On Capitol Hill, despite a spending rampage, a bipartisan pack of House members has introduced legislation to repeal the Spanish American War tax—a 3 percent federal excise tax imposed on traditional telephones. Thought it had been repealed? It hasn’t.
All that was done in 2006 was the IRS and the Department of Treasury, after a long legal battle and at the urging of Congress, discontinued collecting the excise tax on long-distance telephone service. But the law is still there ready to spring back if it is not repealed. Fortunately, some are seeking to do just that.
Also, Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME) have introduced the Mobile Wireless Tax Fairness Act of 2009 to enact a five-year moratorium on new or increased taxes on wireless telecommunications infrastructure and services.
Just as Congress correctly protected the Internet from being burdened with multiple discriminatory taxes in thousands of jurisdictions, so too should mobile-communications access be protected from those who would loot digital citizens.
As George Pieler wrote for IPI of the Spanish-American War tax and communications taxes in general, “It must be struck from our laws in its entirety, and the logic of its repeal extended to all ‘ideas’ for taxing communication services and the Internet. These are all excuses for raising taxes with minimum public input, ignoring the dynamic economic impact, including revenue-generation, of letting new markets for services flourish with minimum government friction.”