By Dennis Cauchon, USA TODAY Mon May 9, 6:20 AM ET
Cell phone users are being hit by new taxes as state and local
governments scramble to replace declining tax revenue from traditional
phones.
The new charges are adding $2 to $10 or more a month to cell phone
bills on top of existing federal and state taxes and fees for
emergency 911 communications. Examples:
. Thirty-two of Virginia's 39 cities have levied cell phone taxes since the
Legislature approved the tax in 2003. Most recently: Alexandria approved a
$3-a-month tax last week.
. Baltimore added a $3.50 monthly tax in September.
. Oregon's Legislature is considering a 5% tax, the Missouri Legislature a
3% or 4% tax.
Many state and local governments consider new cell phone taxes
necessary to recoup money lost from a drop in the number of standard
wired phones. The number of wired phone lines nationwide fell from 167
million in 2000 to 132 million in 2004, the
Federal Communications Commission reports that cell phone subscribers
rose from 109 million to 182 million during that time.
The wireless industry says cell phones are already taxed heavily and
often unfairly. The industry is funding a Web site --
www.stopaddingtomybill.com -- as part of its lobbying effort to
squelch the new taxes.
"People can just look at their cell phone bill and see the taxes are
already excessive," says Joseph Farren, spokesman for CTIA - The
Wireless Association, an industry trade group. He says taxes accounted
for about $9 of the average $51 monthly cell phone bill last year.
Farren says the "watershed event" that started the new round of
taxation was Pennsylvania's approval of a 5% cell phone tax in
2003. Other state and local governments have followed suit or are
considering it.
State and local governments have long taxed land-line telephones, but
cell phones had escaped most of these taxes. An exception: In
California, about 160 local governments have cell phone taxes,
including 10% in Los Angeles and 7.5% in San Francisco.
"The question is, does it make sense to treat one phone differently
from another?" asks Ken Fellman, mayor of Arvada, Colo., a Denver
suburb, and head of a telecommunications committee for the National
League of Cities.
Wireless companies say they shouldn't be treated the same as old phone
companies because they are not monopolies and do not use public rights
of way for phone lines. "The wireless industry has never been a
utility and shouldn't be treated that way," Farren says.
But local governments are changing tax laws to reflect changes in the
economy. cell phone revenue grew from $56 billion in 2000 to $102
billion in 2004. During that time, land-line revenue dropped from $228
billion to $197 billion, the Telecommunications Industry Association
says.
Independence, Missouri will collect $1.75 million in taxes next year from
land-line phones, down from a peak of $2.4 million in 2002. "A phone
is a phone is a phone," city councilman Jason White says. "A cell
phone company doing business in our community should pay the same
taxes."
Cell phone taxes earmarked for emergency services are rising quickly,
too. West Virginia last week doubled the state's 911 service fee on
cell phones to $3 per month.
Copyright 2005 USA TODAY, a division of Gannett Co. Inc.
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