March 10, 2011

Wyden, Snowe Introduce Bill to Protect Consumers from Overbearing Wireless Taxes

The Wireless Tax Fairness Act Will Prohibit Duplicative and Discriminatory Taxes of Wireless Services

Washington, D.C. – In an effort to protect consumers from discriminatory and duplicative taxes on wireless goods and services that threaten mobile Internet access for many consumers, U.S. Senators Ron Wyden (D-Ore.) Olympia Snowe (R- Maine) have introduced legislation in the Senate to prohibit states from imposing any new discriminatory taxes on wireless goods and services for five years. A companion bill in the House of Representatives was introduced today by Reps. Zoe Lofgren (D-Calif.) and Trent Franks (R-Ariz.).

As penetration of wireless mobile services has grown, state and local governments have increasingly looked to tax those services.  Although wireless mobile devices may have been considered luxury goods ten or 15 years ago, they are now ubiquitous and are increasingly the primary communication device in American households.  With the advent of 3G and 4G technology, wireless mobile devices are the gateway to the Internet.   However, most states impose taxes on these goods and services that far exceeds the average state sales tax on other items and approaches or even surpasses that of luxury or vice taxes. The Wireless Tax Fairness Act will prohibit the imposition of such taxes, protecting consumers from new taxes and increasing costs to tap the Internet. 

 “Mobile web access is becoming as important to the lives of Americans as the Internet itself has become over the last fifteen years,” Wyden said. “The discriminatory and duplicative taxes being levied by the states are regressive and harm lower income Americans the most while making access to the Internet unacceptably expensive.  Our policies should be encouraging new innovations in these technologies not holding them back. Without action, states and local governments may tack wireless services with so many taxes that innovation and deployment of new technology and investment are simply not lucrative.” 

“The current landscape of excessive and discriminatory taxes on wireless services discourages its adoption and use, especially with lower income families.” said Senator Snowe.  “As wireless communications become a necessity for families and businesses nationwide, it is imperative wireless consumers are protected from the burdens of exorbitant fees, surcharges, and general business taxes.  I am pleased to join Senator Wyden in re-introducing the Mobile Wireless Tax Fairness Act of 2011 Act to protect this growing and innovative industry, as well as the consumers it serves, from excessive and onerous government tax rates.”

The Wireless Tax Fairness Act of 2011 prohibits state and local governments from imposing discriminatory or duplicative taxes on mobile services, providers or mobile technology for a period of five years. During the years 2003 to 2007 the mobile industry saw their effective tax rates increase four times faster than other taxable goods and services. The average tax rate for taxable goods and services is 7.07 percent however the average tax rate for mobile goods and services is 15.9 percent. The legislation has the endorsement of Cellular Telecommunications Industry Association and the support of the wireless industry.