Marguerite Reardon reports on a new bipartisan congressional bill H.R. 1521 that would ban new state or local taxes on wireless service.  Average taxes for wireless services average more than 15% nationwide while other taxable goods average 7%.  This puts wireless taxes into the category of “sin taxes” even though it has economic benefits for society whereas cigarettes put a huge healthcare burden on society.  And before anyone chimes in that cell phones are dangerous, see the study of 16 million people that says they are not.

The new bill does not go far enough since it doesn’t roll back wireless taxes to a reasonable level nor does it apply to the Universal Service Fund (USF) or emergency services fees, but they do at least prohibit new taxes.  The idea that the federal government would impose tax policy on local governments might seem unfair, but those local governments are asking for federal funding on their communication networks.

Perhaps the better solution is not to directly tell local governments what their tax rates should be, but have reasonable tax rates as a prerequisites for USF money.  If tax payers across the nation are subsidizing communications in a particular region to make communications more affordable, and to the tune of $16,834 a year per person, there’s no justification for high communication taxes that undo the affordability.  By levying sin taxes on communications services, a local or state government is saying that we don’t want people to use communication services and therefore we really don’t want federal subsidies.