May 25, 2006
Wireless Users No Longer Charged Federal Excise Tax
By Susan J. Campbell
TMCnet Contributing Editor
As a wireless user, aren’t you glad that have been able to do your civic
duty in financing the Spanish-America War? Yes, I am talking about the
same war that took place at the turn of the century – the last century.
The United States Treasury has made a decision to abandon its legal
dispute over the federal excise tax (FET) on long-distance telephone
service. This 108-year-old FET was instituted in 1898 to finance the
Spanish-American War and adds 3 percent to the monthly bill of every
wireless user in America. To date, that number exceeds 214 million
estimated subscribers.
The Wireless Association President and CEO Steve Largent congratulated
the US Treasury on its decision, pointing out that the Spanish-American
War ended successfully a long time ago. After a rough ride for
consumers, the battle over the FET has also come to an end.
Largent continued, stating that today, every wireless subscriber in the
nation can celebrate a much-deserved 3 percent tax cut. Without the
millions of wireless users all across America lending their voice to
this effort, the Wireless Association may not have reached this
important day.
The federal surcharge was found to be illegal by five separate U.S.
Circuit Courts of Appeals. As a result, the Internal Revenue Service has
come under increasing pressure in recent months to repeal the FET.
The ancient tax was levied on phone calls, but the charges varied based
on the call’s duration and distance traveled. The wireless industry
changed its strategy and abandoned this tariff years ago in favor of
offering consumers “all-distance” minutes.
Now that the FET is finally taking its rightful place along side the
Spanish-American War in US history books, wireless consumers can now
turn their attention and efforts to repealing discriminatory wireless
taxes on the state and local level, continued Largent.
It is the numerous state and local wireless-specific surcharges Largent
was referring to that contribute to the average wireless American user
paying 17 percent of his or her monthly bill in taxes and fees. The CTIA
(Cellular Telecommunications & Internet Association) is seeing an influx
of Americans turning to wireless to meet their telecommunication’s
needs. As a result, state and local policy makers are looking at the
growing number of wireless consumers to plug holes in their budgets.
Largent pointed out that these taxes can be roadblocks to low or
fixed-income Americans who want to enjoy the benefits and efficiencies
that only wireless can deliver. Some public bodies still considering tax
policies that discourage segments of the population from taking part in
the wireless revolution makes no sense at all.
It is also unfortunate that our government has historically demonstrated
mismanagement of our tax dollars as this excise tax should have ended
with the war. Instead, it was collected for years to fund other things
for which it was never intended. Most likely, we will probably see a
replacement tax pop up on the ballot in the near future as our
government tends to hate to do without that which it is accustomed to.
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