House OKs Bill to Simplify Taxes on Cell Phones
W A S H I N G T O N, July 11 -- A measure to clear up the confusing patchworkof taxes now assessed on cellular phone calls cleared the Housetoday.
The legislation would modify the existing system so thatwireless users would be taxed only in their place of primary use — essentially the area in which they have subscribed for the service.
The bill passed by voice vote. A similar measure is movingthrough the Senate.
Currently, consumers are taxed in a variety of ways by statesand localities. They can be taxed based on the cell site or localswitch closest to where they originate their call, or their homebilling address.
Don’t Expect Lower Taxes
The result is a complicated scheme for calculating monthlybills, since mobile users typically make calls from a number ofdifferent localities. For example, on a drive between Baltimore andPhiladelphia, a consumer crosses a dozen different taxjurisdictions, meaning that each call made on this route could beassessed different state and local taxes.
In another example provided by the Cellular TelecommunicationsIndustry Association, a business caller who makes 39 wireless callsin three different cities could fall into 26 different state andlocal tax jurisdictions.
If the measure becomes law, consumers won’t necessarily havelower taxes on their wireless bills. Depending on the taxes in thelocality where they primarily use their phone, consumers may seetheir bills decrease or increase. But it will reduce thepossibility of errors and give consumers a more consistent monthlybill, said lawmakers and industry officials.
The measure will ensure that wireless calls “are not confrontedwith a thicket of taxing jurisdictions,” said Rep. Jerrold Nadler,D-N.Y., who introduced the measure along with other members of theJudiciary Committee. “It will simplify the process of taxcollection without imposing any new taxes.”
Easier to Understand, Administer
Under the current system, consumers who have a “bucket plan” — in which they pay a flat fee and receive a set number of minutes — sometimes see the taxes on their bill fluctuate month to month eventhough their total charges are the same.
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