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Report: New taxes levied on cellphones
State and local governments, losing revenue on land-line phone taxes, are targeting cellphones
May 9, 2005: 11:46 AM EDT

NEW YORK (CNN/Money) - State and local governments, reeling from declines in taxes from land-line phone service, are imposing new taxes on cellphone users, according to a story published Monday in USA Today.

The paper said the new charges will increase cellphone bills $2 to $10 a month.

Some of the new taxes USA Today reported:

  • Last week, Alexandria, Va., joined 31 other of the state's 39 cities in levying cellphone taxes, approving a $3-a-month tax.
  • Baltimore enacted a $3.50 cellphone tax last September.
  • The Oregon legislature has a 5 percent tax proposal up for consideration and Missouri is looking at a 3 percent or 4 percent tax.

The FCC reports the number of wired phones lines fell from 167 million in 2000 to 132 million in 2004. Cellphones grew from 108 million to 182 million during that time. Cellphone revenue grew from $56 billion to $102 billion, while land-line revenue dropped to $197 billion from $228 billion, according to figures from the Telecommunications Industry Association.

In Independence, Mo., revenue from land-line phone taxes will decline from a peak of $2.4 million to $1.75 million next year, USA Today reported. "A cellphone company doing business in our community should pay the same taxes," city councilman Jason White told the paper.

In California, 160 local governments already tax cellphones, including a 10 percent tax in Los Angeles and 7.5 percent in San Francisco.

Cellphone companies say they are not monopolies and do not use public rights of way for phone lines. The paper quoted Joseph Farren, spokesman for CTIA-The Wireless Association saying, "The wireless industry has never been a utility and shouldn't be treated that way. People can just look at their cellphone bill and see the taxes are already excessive." They account for about $9 of the average $51 monthly cellphone bill.

The industry is funding a Web site – www.stopaddingtomybill.com – as part of a lobbying effort to squelch new taxes.

The paper quoted Ken Fellman, mayor of Arvada Colorado and head of a telecommunications committee with the National League of Cities, asking, "Does it make sense to treat one phone differently from another?"

Fees for 911 services are also rising. West Virginia last week doubled its 911 fee to $3 a month.

State tax collections were way up last year. For details, click here.  Top of page

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