Wireless Tax Fairness Act Introduced in the U.S. House

Since the average consumer now pays nearly 18% in combined state, local and federal wireless taxes and fees, a tax-increase trend that has continued to rise, we’re thrilled to see Congress take some action today that could provide wireless consumers some much needed relief.

Representatives Zoe Lofgren (D-CA) and Trent Franks (R-AZ) introduced the ‘Wireless Tax Fairness Act’ which would put a freeze on any new discriminatory state or local wireless taxes and fees for five years. We hope that a companion bill will be introduced in the Senate soon.

History

You might remember this bipartisan bill unanimously passed in the U.S. House of Representatives in the 112th Congress, but the Senate failed to act on its companion bill. Since then the average wireless tax rate has increased by almost two percent from 16.3% to 17.96%.

We thank Representatives Lofgren and Franks for reintroducing this much-needed legislation. Now it’s time for Congress to take action now before wireless tax rates go up any more!

 


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Chicago’s “Netflix tax” highlights the need for digital goods tax fairness

The city of Chicago is currently mired in a legal dispute over what has been dubbed the “Netflix tax” that was put into effect in July of this year. For some background, Chicago officials expanded the city’s “amusement tax” which is applied to things such as concerts or sporting events, to cover completely unrelated streaming services such as Netflix, Spotify, Hulu, Amazon Prime, and others.

The reason that Chicago finds itself in this legal battle is because a group of constituent subscribers of these services has pushed back on the grounds that the new tax violates the ‘Internet Tax Freedom Act’, which prevents states and localities from imposing discriminatory taxes on Internet commerce. This also begins to wade into the issues of digital goods taxation surrounding the ‘Digital Goods and Services Tax Fairness Act’ being considered in Congress right now. The digital goods legislation, which was introduced in the U.S. House and Senate this year, seeks to prevent digital goods purchases from being subjected to multiple and discriminatory taxes.

Taxing digital goods and services is bad for several reasons. Singling out digital consumers for tax purposes is discriminatory. This is especially the case in Chicago where the applied tax isn’t even relevant to the streaming services being targeted and doesn’t apply to other similar goods or services. The digital marketplace is also susceptible to multiple-taxation; meaning that it’s possible you could be taxed by several different jurisdictions for the same digital purchase. For example, if your home address is located in one jurisdiction, but you buy something with your wireless device when you’re in another one, from a company in yet another part of the country, it’s possible today all three jurisdictions can try and tax the same transaction! While Chicago may be claiming that they are targeting only residents with billable addresses in the city, this does nothing to prevent other jurisdictions from attempting to attach more taxes to streaming services based on where the service is being used, or even where the service provider (and potentially servers) is located.

States and localities such as Chicago are constantly searching for revenue streams to help fill the gaps of rising budget shortfalls. These governments are increasingly turning toward the consumers of digital goods and wireless services and hitting them with discriminatory taxes to help bridge their current budget deficits. This is especially problematic with wireless being such an essential part of Americans’ everyday lives. Not quite what you would call sound policy with the interests of their wireless-reliant constituents at heart.

It’s time for Congress to address the problems highlighted by the “Netflix tax” by taking up the ‘Digital Goods & Services Tax Fairness Act’ (S. 851, H.R. 1643). Digital goods consumers deserve to be treated fairly and have a reasonable and sensible tax structure that keeps them from being a moving target as a source of revenue for states and localities across the country.

Tell your Representative and Senators today that you deserve digital goods tax fairness!

Take action now!

 


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Wireless broadband deployment should be a priority

Wireless is everywhere. Virtually everyone owns a mobile device of some kind, with the bulk having smart phones, used for everything from communicating with family and friends to entertainment to business management, education and even health monitoring.

As we increasingly rely on devices and services for so many essential facets of everyday life, it’s no surprise that data usage has risen dramatically in the past few years and is projected to skyrocket by the end of the decade. This is something that the wireless industry is taking very seriously – and policymakers should too.

Luckily Congress is taking notice. Earlier this fall, the U.S. Senate Commerce Committee and the House Energy and Commerce Subcommittee on Communications and Technology each held hearings to examine what must be done to help address the rising demand in wireless. Both hearings focused specifically on the need to remove existing barriers to much needed deployment of wireless broadband infrastructure.

So what are the barriers to broadband deployment that must be reviewed? A good place to start is the deployment infrastructure on federal property. Procedures vary widely among different agencies and establishing a more streamlined process would help expedite broadband deployment. Similarly, the historic preservation deployment review process should also be streamlined.

There is also an economic component to consider when discussing broadband deployment. It’s no surprise to anyone now that wireless broadband is a key driver of the U.S. economy. This is even more apparent when hurdles to infrastructure deployment are removed and industry investment and job creation which fuels even greater economic growth are unleashed.

Wireless broadband deployment is an issue that enjoys bipartisan support as well. At the Communications and Technology Subcommittee hearing, Members discussed legislative proposals that would help expand deployment and boost wireless broadband nationwide. One such proposal is the Broadband Conduit Deployment Act (H.R. 3805), known as “dig-once” legislation, which would require states to consider installing wireless infrastructure when highway construction projects are underway.

While a lot of recent attention has been placed on making more licensed spectrum available for wireless use to help meet demand, removing longstanding barriers to wireless infrastructure deployment is just as essential. The future of how you and I will be able to utilize the devices and services that are so important to us as consumers is dependent on action to remove these barriers. Wireless is everywhere. Without network infrastructure, spectrum (and wireless in general) is virtually useless.

 


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New Study Reveals That Wireless Taxes Continue To Rise

A new report by economist Scott Mackey and the non-partisan Tax Foundation shows that the excessive rate of wireless taxation on American consumers is on the rise across the country.

The national average rate for wireless taxes jumped from 17.05 percent to 17.96 percent. Washington State once again has the highest combined wireless tax rate, which now exceeds 25 percent. Florida (21 percent) dropped from the 4th highest taxed state to 7th thanks to a reduction to state’s Communications Services Tax. Seven other state’s now join Washington and Florida with rates in excess of 20 percent (Nebraska, New York, Illinois, Missouri, Rhode Island, Arkansas and Pennsylvania).

Some of the report’s main findings include:

  • On average, American consumers are now taxed at a rate of nearly 18% in federal, state and local fees on wireless service.
  • The average rates of taxes and fees on wireless phone service are more than double the average sales tax rate.
  • Wireless consumers annually pay about $5.8 billion in excess of the normal state and local sales taxes imposed on the purchase of other goods and services. This is in addition to $5 billion in Federal Universal Service Fund surcharges.
  • Excessive wireless taxes and fees disproportionately impact poor families, many of whom rely on wireless as their main form of communication.

And here are this year’s top ten highest taxed states for wireless:

  1. Washington – 25.15%
  2. Nebraska – 24.99%
  3. New York – 24.36%
  4. Illinois – 23.92%
  5. Missouri – 21.25%
  6. Rhode Island – 21.16%
  7. Florida – 21.12%
  8. Arkansas – 20.77%
  9. Pennsylvania – 20.60%
  10. Kansas – 19.99%

(See the full rankings here)

Wireless taxes are discriminatory and regressive – they hit seniors, minority communities, working families and small businesses especially hard. It just seems unfair to target a service that we rely on for business, education, entertainment, healthcare, Internet access, personal communication, public safety – and everything in between, with such a disproportionate tax. This is especially true for the 45 percent of American households who only have wireless telephones.

State lawmakers should follow Florida’s lead and look for opportunities to reduce these high rates on a service that is so essential to our daily lives.

 

 


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mHealth is a game-changer

Last week, The Wireless Foundation hosted the “Mobile Health & Wellness Expo” at the FCC and FDA to showcase the latest and greatest life-changing (and in some cases life-saving) health innovations from wireless industry and tech entrepreneurs. Opening the event, FCC Commissioner Mignon Clyburn said, “Innovative technologies and wireless broadband are completely changing when, how, and where medical care takes place allowing more care to and from the most remote of places and to and from the most advanced clinical epicenters.” In prepared remarks, FDA Acting Commissioner Stephen Ostroff added, “These new mobile technologies promote healthy living by allowing more people to manage their own health and wellness. And they provide people access to useful information when and where they need it.”

As the commissioners pointed out, the innovations displayed at the expo reflect a promising future in which everything from managing chronic conditions and real-time diagnoses, to maintaining healthy lifestyles, are commonplace. It is important to point out that mobile health (or mHealth) encompasses not only high-tech devices or services and the leading medical professionals who use them, but also the wireless infrastructure and devices such as smartphones or tablets that consumers like you and I rely on daily, from anywhere at any time.

mHealth is already a mainstay of our daily lives. According to Pew Research Center, two-thirds of smartphone owners are already using their phones for mHealth information.  IMS Health Institute also points out that there is already a wide range of over 165,000 mHealth apps in the marketplace – and over 90 percent of the mHealth apps are free. The anticipated growth of the space is staggering as well, with projections of the telemedicine and mHealth markets potentially valued at over $45 billion by 2021.

These wireless innovations will all require faster and more robust networks to carry high volumes of data very quickly. CTIA President Meredith Attwell Baker highlighted this point in a recent op-ed in WirelessWeek where she wrote:

Wireless connectivity already touches every aspect of daily life, but we are just scratching the surface. Sensors in smart cities will determine optimum traffic routing, easing congestion and helping protect the environment. Intelligent lighting will illuminate evacuation routes in buildings. Connected wheelchairs will increase users’ independence. This is the promise of the next generation of mobile networks, known as 5G.

Achieving better health outcomes will require a combination of network innovation toward 5G services, bringing more licensed spectrum online to handle network volume, and guaranteeing a regulatory environment that encourages the continued deployment of the wireless broadband upon which  mHealth is depends.

The true game-changer in mHealth is the device you already own that can connect you to the world’s best services and specialists. It is crucial that lawmakers and regulators at the federal, state and local levels do their part to encourage the growth of this vital space and avoid placing barriers on the wireless devices and services consumers depend on.

 


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