June 26, 2013

Wyden, Toomey’s Wireless Tax Fairness Act Protects Consumers and Promotes Wireless Phone and Internet Services as an Engine of Innovation

Washington, D.C. – Mobile technology is getting faster, smarter and more capable every year. The level and pace of innovation in the mobile wireless industry is unlike any other sector of the economy, but that innovation could be threatened by multiple and discriminatory taxes levied by state and local governments. In an effort to protect consumers from overbearing taxation and keep the mobile Internet as an innovation juggernaut, U.S. Senator Ron Wyden (D-Ore.) and Pat Toomey (R-Penn.) have introduced the Wireless Tax Fairness Act.

State and local governments see overly taxing wireless Internet services as a means to cover budget shortfalls. Taxes on these goods and services far exceed average sales taxes and even those of luxury or vice taxes. The Wireless Tax Fairness Act prohibits states from imposing any new discriminatory taxes on wireless goods and services for five years.

“Mobile voice and data services are not the luxury items they may have once been considered,” Wyden said. “They are ubiquitous technologies that are more and more the primary way consumers access the Internet. Excessively taxing these goods and services stands in the way of innovation within the digital economy.   There is no reason wireless tax rates should be on par with vice taxes like tobacco and alcohol. It is time to protect wireless services from unfair and excessive taxes.”

Said Sen. Toomey:  “Our bipartisan bill will protect consumers in Pennsylvania and across the country from tax increases on wireless products and services.  Rather taking more money out of people’s pockets, we need to let the internet economy thrive and create jobs without being subject to a tax that is not imposed on other products or services.”

Between 2003 and 2007 the effective tax rate for the wireless voice and Internet services increased four times faster than other taxable goods. The Internet economy is now a driver of economic growth, but discriminatory taxes on wireless services are acting to throttle mobile, online innovation that is driving economic growth and job creation.  More than a decade ago, Congress stepped in to protect the Internet from discriminatory taxes; it’s time to protect wireless access to the Internet from the same threat.