New cellphone tax break proposed

A tax holiday may be in the future for wireless providers and the nation’s 262 million cellphone users after all.
Sens. Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine) introduced legislation to impose a five-year moratorium on new or increased wireless taxes.
“Americans are being hit hard with rising costs for gas, health care, and food for the dinner table. Americans need to know that their cellphone bills won’t be the next cost to spiral out of control,” said Wyden. “Keeping our telecom infrastructure cutting-edge keeps our economy moving and helps the millions of Americans and businesses who depend on affordable wireless services.”
Wyden and Snowe said taxes levied on wireless and other telecom services sometimes rival those placed on tobacco and alcohol. The two lawmakers’ measure mirrors efforts by Reps. Zoe Lofgren (D-Calif.) and Chris Cannon (R-Utah), who in April sponsored a bill to impose a five-year freeze on new discriminatory state and local wireless taxes.
In early 2007, Sens. John McCain (R-Ariz.) and Jim DeMint (R-S.C.) pursued legislation to freeze new, discriminatory wireless taxes, but the bill didn’t move in the Democratic-controlled Congress. The Wyden-Snowe bill revives chances for the wireless industry to win some tax relief before Congress shuts down this election year.
“These excessive and discriminatory taxes discourage wireless adoption and use, primarily with low-income individuals and families that still view a cellular phone as a luxury when many Americans consider it a necessity,” Snowe stated. “By banning these taxes, we can equalize the taxation of the wireless industry with that of other goods and services and protect the wireless consumer from the weight of fees, surcharges, and general business taxes.”
The cellular industry said wireless tax legislation is urgently needed.
“The average wireless consumer in the U.S. today pays more than 15% of his or her monthly bill in taxes and fees – more than twice the rate imposed on other competitive goods and services subject to sales tax. This is an indefensible level of taxation for most any product, let alone one that allows millions of Americans to constantly stay connected with the world around them,” said Steve Largent, president of cellular industry association CTIA. “We look forward to working with the sponsors and all members of Congress to see that this important legislation becomes law.”
Wireless providers are fighting tax hikes in states around the county, prompting litigation in some cases. Last year, AT&T Mobility, Verizon Wireless and Sprint Nextel Corp. agreed to multi-million settlements with Missouri municipalities.
More recently, a federal appeals court ruled Springfield, Mo. could recover back taxes from AT&T Mobility and Alltel Communications L.L.C.
“Verizon Wireless has always said wireless customers should not be subject to unfair and discriminatory taxes, and this bill addresses that issue directly,” said Steve Zipperstein, VP and general counsel at Verizon Wireless. “On behalf of our more than 67 million customers, we applaud this proposed legislation and commend Senators Wyden and Snowe for this important effort to make wireless services more affordable for American consumers.”