Monday, July 11, 2011

New Study Sheds Light on Costs of Heavy Wireless Taxation

On this blog we've pointed to the problems with the heavy wireless tax burden shouldered by consumers. Federal, state, and local taxes, fees, and surcharges hit wireless consumers hard. Now a recent study by Glenn Woroch, executive director of the Center for Research on Telecommunications Policy at the University of California Berkeley, describes in more detail the toll that wireless taxes are taking on consumers.

The study – "The 'Wireless Tax Premium' Harms American Consumers and Squanders the Potential of the Mobile Economy" – contains an estimate that "at current levels the American consumer forgoes over $15 billion in surplus annually compared to when cell phones receive the same tax treatment as other goods and services." Other insights from the study include a comparison of states' wireless taxes with states' "sin taxes" on cigarettes and beer. The study's comparison reveals the startling fact that wireless is overwhelmingly subject to higher state tax rates than beer.

As the study makes all too plain, our nation's tax treatment of wireless is at odds with our nation's policy for increasing wireless broadband deployment and affordable access. Federal, state, and local policymakers who have a say-so when it comes wireless taxation need to be reminded that while such taxes may generate government revenues, they also impose serious costs. Those costs include those imposed directly on consumers as well as those imposed indirect to the economy through dislocation and lost opportunities.