The cell phone industry is complaining about the level of taxation on their customers’ bills. In Illinois, taxes and government-imposed fees amount to 21 percent of the bill, ranking the state fifth in the nation. Nebraska is No. 1. Industry consultant Scott Mackey says historically, these were viewed as luxury taxes.
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“Twenty-five or 30 years ago, when only rich people could afford wireless phones, you might be able to excuse some of these high rates. But we’ve actually seen a huge democratization of wireless service, where now it’s actually the opposite. You have lower-income people more heavily reliant on wireless service than wealthier consumers,” he said.
In some cases, taxes on telephone service– wired and wireless – have grown because cities scrapped vehicle sticker taxes, which are hard to collect, and replaced the revenue with utility and phone taxes, which are easier to collect. The switch didn’t necessarily result in a tax increase on the people, but it placed a greater burden of collection on phone companies.
Mackey says the tax structure should be re-evaluated, and perhaps the ban on taxation of internet service should be lifted so the communication tax burden doesn’t fall entirely on phones.
In the meantime, the industry is seeking a federal five-year ban on state and local tax increases on cell phone service. It passed unanimously in the House. It has not moved in the Senate. U.S. Sen. Mark S. Kirk (R-Ill.) is one of 19 co-sponsors; U.S. Sen. Dick Durbin (D-Ill.) has not taken a position.