Wireless Tax Fairness Act going to get full vote by the House

Yesterday, the House Judiciary Committee voted to send the Wireless Tax Fairness Act to the full House for a vote. The bill would freeze for 5 years current taxes on mobile devices that use a service plan, such as cell phones and tablets. Currently, mobile consumers in the U.S. pay an average $92 a year in taxes which works out to a rate of 16.3%-the highest rate ever. That is up from the 14.1% rate seen in 2006. This info comes from research organization, the Heartland Institute.

This is one cause that finds mobile carriers hand in hand with consumers. After all, higher taxes can be a deterrent to purchasing a cell phone plan. Congresswoman Zoe Lofgren (D-California) says that, "Higher tax rates in the wireless space deter investments." The Congresswoman is a co-author of the bill. According to the CTIA, while the tax rate accounts for 16.3% of cell phone bills, it comes to only 7.4% for other services and goods. The industry trade group says that cellular customers are being targeted because they are "good bill payers."

Five states have tax rates on cellular plans that are higher than 20% including Florida, Illinois and Washington. In some individual cities, the rates are even higher. Baltimore, for example, levies a 27% tax on wireless service while in the Big, ahem, Apple, the tax rate is 20%. The bill is not a panacea for cell phone users as it addresses only state and local taxes. The federal "universal service fund" which currently is about 5% of the average bill, is not affected.

The problem is that local tills are near empty with the economy doing so poorly and the shortfall needs to be made up somehow. The cell phone industry has so far defied the gravity of a poor economy as many still are able to purchase the latest smartphone at launch. The CTIA has been lobbying for passage of the bill, but no one can say for certain how the voting will go. If the bill does make it to law, a very hot industry has the potential to become even hotter.

source: SmartMoney