Topics:

CTIA again pushes for wireless tax moratorium

Tools

The CTIA is once again taking up a perennial lobbying issue by pushing for a five-year moratorium on new state and local wireless taxes, citing a study that says the tax burden on wireless customers has gone up during the past few years. 

In a blog post, CTIA President Steve Largent said that the trade group is advocating for the U.S. Senate to pass the Wireless Tax Fairness Act. "The U.S. House already passed the bipartisan bill last year, but we need the Senate to do the same so millions of wireless customers can get some much needed financial relief," he wrote. The bill has been an annual favorite of the CTIA but has yet to make it into law despite years of legislators pushing it.

Largent pointed to a study by Scott Mackey, a partner at KSE Partners in Montpelier, Vt., which notes that the average wireless tax burden on consumers increased from 16.26 percent in July 2010 to 17.18 percent in July 2012. Mackey works with a coalition of wireless providers, including all of the Tier 1 carriers, "in support of state and local tax policies that encourage investment in wireless networks and reduce excessive taxes on wireless consumers," according to the report.

"Wireless consumers now pay the highest combined tax and fee burden since I began tracking rates in 2003, more than 3 percentage points above the 14.13 percent rate in 2007, which marked the low point for wireless taxes and fees during the last decade," Mackey wrote in the report. "Wireless customers now pay taxes, fees, and surcharges nearly two and a half times higher than the average 7.33 percent general sales tax rate imposed on other taxable goods and services."

The CTIA's advocacy comes as Congress resumes its business with a lame-duck session, which begins today. Congress is expected to be consumed with fiscal issues, including a host of tax increases that are scheduled to take place Jan. 1.

Opponents of CTIA's legislation call it a giveaway to wireless carriers at a time when revenues, especially from data, have been increasing. U.S. mobile operators raked in third quarter 2012 data revenues of $19.9 billion, up 3 percent quarter-over-quarter and 17 percent year-over-year, according to new research from Chetan Sharma Consulting.

The CTIA on Wednesday objected to the characterization of the legislation as a giveaway to wireless carriers. That argument was advanced at a congressional hearing on the legislation in July 2011. "This bill is not about expanding broadband technology or providing tax parity for an overtaxed industry," said Bernita Sims, according to BillingWorld. Sims is a council member with the City of High Point, N.C., and member of the Finance, Administration and Intergovernmental Relations Committee of the National League of Cities. "Rather, this bill is about special treatment and favoritism for wireless phone companies that continue to experience explosive growth and profits."

On Wednesday the CTIA pointed to an analysis by the nonpartisan Congressional Budget Office, which concluded in July 2011 that the legislation "would not preempt the authority of governments to collect revenue from taxes on wireless services that have already been enacted and enforced."

"CBO did not identify any state or local governments that planned to change or impose new wireless taxes in the next five years; therefore, CBO estimates that the preemption would impose no cost on state, local, or tribal governments," the agency said.

For more:
- see this CTIA blog post
- see this CTIA study (PDF)
- see this CBO report

Related Articles:
Sprint faces SEC probe over tax collection practices
Sprint slapped with $300M lawsuit in N.Y. over unpaid taxes
Opponents claim tax moratorium bill favors wireless carriers
Lawmakers once again introduce wireless tax moratorium bill
Lawmakers advance bill to freeze cell taxes
CTIA pushes for repeal of tax on work-issued cell phones

Article updated Nov. 14 to note CTIA's response.