Federal, state, and local taxes and fees now account for 16.3% of the average wireless customer’s bill. In four states, wireless taxes are north of 20%. And what’s the most taxed state of all? That dubious achievement goes to Nebraska, where wireless users are taxed to the tune of 23.7%.
In a new report, “A Growing Burden: Taxes and Fees on Wireless Services” (tip of the hat to PC Mag), the tax policy experts from KSE Partners—which, fyi, happens to work with a coalition of wireless providers—state:
Wireless users now face a combined federal, state, and local tax and fee burden of 16.3 percent, a rate two times higher than the average retail sales tax rate and the highest wireless rate since 2005.
In Lincoln, Neb., for instance, which upped something called the telecommunications business tax from 5.5% to 6% in 2009, a wireless customer with a monthly wireless bill of $48 pays $11.35 in taxes, fees, and surcharges. The taxes add up to nearly one-quarter of the bill. Meanwhile, the typical retail sales tax in Nebraska is 7%.
Why are wireless taxes so high? At least partly because they’re a relatively easy, under-the-radar means of state and local governments plugging huge, recession-related budget holes. From the report:
Local governments in a few states have been aggressive in levying new taxes on wireless users as the recession has stressed revenue collections from property and other broad-based taxes. For example, the city of Baltimore increased its per-line tax from $3.50 per month to $4 per month, while Montgomery County, Md., increased its per-line tax from $2 to $3.50.