New bill in Senate for moratorium on wireless taxes

By Mickey Alam Khan

July 14, 2008

Mickey Alam Khan is editor in chief of Mobile Marketer

Three months after the U.S. House of Representatives, a new bill was introduced last week in the U.S. Senate to impose a five-year moratorium on new or existing taxes on wireless telecoms and infrastructure. That's good news for both mobile companies and consumers.

The introduction July 11 of the Mobile Wireless Tax Fairness Act of 2008 by Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME) in the Senate comes at a time when the average mobile subscriber pays more than 15 percent of his or her monthly bill on taxes and fees.

That rate exceeds, in some states, the taxes on tobacco and alcohol. It is also twice the 7.1 percent rate imposed on other competitive goods and services subject to sales tax.

It is easy to forget the legislative side of the mobile industry in the fog of Apple iPhone PR, mobile marketing campaigns and new whiz-bang technology.

But marketers must not lose sight of the new discriminatory state and local wireless taxes imposed on consumers.

Every opportunity to liaise with the local, state and Congressional lawmakers must be used to stand up for mobile consumers. Their welfare is the industry's welfare.

The CTIA-The Wireless Association has been an ardent advocate of legislation to curb extra taxes on mobile subscribers.

The Washington-based association pushed hard to get the Cell Tax Fairness Act bill introduced April 15 in the House. Sponsored by Representatives Zoe Lofgren (D-CA) and Chris Cannon (R-UT), the bill already has 80 co-sponsors.

Both bills in the House and the Senate enjoy bipartisan support, which is rare these days in Washington.

"I think the Senate introduction indicates this is an issue whose time has come and that the high cell phone taxes is a problem in America," said Joe Farren, assistant vice president of public affairs at the CTIA, Washington.

"Ultimately, we supported and want it passed because we believe it provides our member companies' customers with needed tax relief," he said. "We're trying to get a hearing and the goal is to get committee markup and we're working hard to achieve that."

A recent study on taxation of wireless service in the United States confirmed that, between 2003 and 2007, taxes and fees on wireless services increased four times faster than taxes on other goods and services. Blame municipalities, counties and states for those taxes.

In another anomaly, there is also a penalty on innovation: the more innovative the mobile phone, the higher the tax. It should be the opposite.

These issues should matter to mobile marketers.

An unfair tax burden on consumers just as the mobile industry is getting more sophisticated will stifle increased usage of Internet, texting and data services on handsets. Consumers will be reluctant to pay higher taxes for buying phones with more�data functions.

So it is wise to follow the progress of the Mobile Wireless Tax Fairness Act of 2008, also known as S. 3249 in the Senate. The same goes for the House bill.

Reach out to your Senators and Congressmen and Congresswomen and ask them to support both bills and pass legislation that is fair. Surely a mobile phone cannot be worse than a drink or a smoke.�