Reps. Lofgren and Cannon Introduce Cell Tax Fairness Act

April 15, 2008. Rep. Zoe Lofgren (D-CA), Rep. Chris Cannon (R-UT) and others introduced HR 5793 [LOC | WW], the "Cell Tax Fairness Act".

The other original cosponsors of the bill are Rep. Steve Chabot (R-OH), Rep. Steve Cohen (D-TN), Rep. Greg Meeks (D-NY), and Rep. James Sensenbrenner (R-WI). It was referred to the House Judiciary Committee (HJC). Rep. Lofgren, Cannon, Chabot, Cohen, and Sensenbrenner are members.

This bill is similar to previous legislation known as the Internet Tax Freedom Act (ITFA).

The just introduced bill would impose a five year moratorium on new and discriminatory state and local taxes on mobile services.

It provides that "No State or local jurisdiction shall impose a new discriminatory tax on or with respect to mobile services, mobile service providers, or mobile service property, during the 5-year period beginning on the date of enactment of this Act."

Like the various ITFAs, this bill is loaded with exceptions. First, it does not affect federal taxation. Second, it grandfathers all existing taxes. Third, it does not restrict any taxes that fund universal service subsidies. Fourth, it does not restrict any taxes that fund 911 programs.

It defines "mobile services" as "commercial mobile radio service" (CMRS) or "any other service that is primarily intended for receipt on, transmission from, or use with a mobile telephone, including but not limited to the receipt of a digital good."

It defines "mobile service providers" as "any entity that sells or provides mobile services, but only to the extent that such entity sells or provides mobile services".

It defines "mobile service property" as "all property used by a mobile service provider in connection with its business of providing mobile services, whether real, personal, tangible, or intangible and includes, but is not limited to goodwill, licenses, customer lists, and other similar intangible property associated with such business".

Rep. Lofgren (at left) stated in a release that "The Cell Tax Fairness Act will help ensure that consumers make choices about communications technology based on the merits of that technology, rather than on the rate of taxation".

She added that "The Cell Tax Fairness Act does not take away any existing revenue for state or local governments, it simply calls for a period of tax stabilization that will help further innovation and access in the wireless world."

Rep. Cannon stated in a release that "This new bill prevents the imposition of new discriminatory tax increases on wireless service. This is a basic issue of tax fairness. Government in America has a spending problem and an addiction to taxing emerging industries. We should let the market decide what technology and products emerge. Taxes and regulation tend to kill new ideas."

Rep. Cannon's release also states that "Currently, typical consumer pays 15.19 % of their wireless bill in federal, state, and local taxes, fees and charges, compared to 7.07% for other goods and services. Between January 2003 and July 2007, the effective rate of taxation on wireless service increased four times faster than the rate for other taxable goods and services."

Rep. Cannon also stated that "With the spectrum freed up by the transition from analog to digital television, wireless will be an increasingly popular and viable platform for broadband access to the Internet. Nothing will kill this growth like the meddling hand of government."

Steve Largent, head of the CTIA, stated in a release that "Keeping wireless taxes at a fair and reasonable level is critical to growing the economy and making the workforce more productive, efficient and informed ... We should do everything in our power to remove the roadblocks -- such as excessive, discriminatory wireless taxes -- that stand in the way of progress, and the Cell Tax Fairness legislation introduced today in the House is a positive step in the right direction."

Lowell McAdam, P/CEO of Verizon Wireless, stated in this release that "The wireless sector of the technology industry continues to be an important driver for growth in our nation’s economy. Americans don't just talk on their wireless phones anymore; they access the Internet, get information, pay bills and use wireless to be more productive at work and other every day activities".

McAdam added that "With about 15 percent of each customer's monthly bill already going to taxes and fees, increasing discriminatory and unfair taxes on wireless customers presents a clear and present danger to future growth. Policymakers should roll back taxes on wireless customers."

mywireless.org stated in a release that "wireless consumers pay approximately $21 billion dollars annually in wireless taxes and fees" and that "state and local taxes and fees on wireless services are regressive" and "the burden often falls especially hard on fixed-income users such as seniors, working families and small businesses".