Senators Propose Wireless Tax Moratorium

Published February 1, 2007

U.S. Senators John McCain (R-AZ) and Jim DeMint (R-SC) are leading a move against the imposition of new “discriminatory” taxes on wireless communications services.

On January 4 the two senators introduced the “Cell Phone Tax Moratorium Act of 2007,” which would impose a three-year moratorium on state and local governments adopting discriminatory taxes on wireless services. “Discriminatory” is defined as taxes not generally imposed on other services or that are imposed at a higher rate.

“Senators McCain and DeMint are to be congratulated for their steadfast defense of the American wireless user, who continues to be the target of discriminatory taxation,” said Steve Largent, president and CEO of CTIA-The Wireless Association.

“Today, the average wireless user in America pays more than 14 percent of his or her monthly bill in taxes and fees,” Largent said. “This is an indefensible level of taxation for most any product, let alone one that allows more than 225 million Americans to constantly stay connected and in touch with the world around them.”

Some Pay 22 Percent

Largent and other industry representatives also note that in some locations, wireless subscribers pay upwards of 22 percent in taxes and government-mandated fees.

“As a nation, we simply cannot make the strides we have to make with regard to broadband adoption if we continue to tax this innovative and high-tech service in such an exorbitant and regressive fashion,” Largent said.

McCain said in a floor statement, “During the three-year moratorium, it is my hope that state and local governments in cooperation with industry will work to eliminate discriminatory taxes and fees on wireless services.”

In a corporate statement, Sprint Nextel Corp. praised the bill and said, “With passage of this act, state and local governments will stop treating our customers as human ATM machines.”

Jim Schuler ([email protected]) is assistant vice president, external & state affairs at CTIA -The Wireless Association.