Friday, April 17, 2015

Maryland's Prince George's County Proposes to Increase Wireless Taxes

Just a week or so after the Florida House of Representatives passed a bill which would reduce cellphone taxes, a County Executive in Maryland’s Prince George’s (PG) County proposes the opposite. County Executive Rushern Baker proposed a budget which includes a 50 percent increase in telecommunications taxes.
If passed, PG County residents would see their landline, television, and wireless tax rates go from 8 percent to 12 percent. When factoring in state and federal taxes, PG County residents would pay a total wireless tax and fee burden of 26 percent, which would be second in the country to only Chicago residents. Policymakers throughout the United States – including PG County - should instead work to lower tax rates as a means to encourage innovation and economic growth.
Additionally, lowering wireless taxes reduces prices for consumers and subsequently increases demand and competition in the wireless market. This expands the consumer base and oftentimes increases tax revenue for the jurisdiction as more consumers contribute to the pot.
I understand Prince George’s County wants to raise revenue, but a regressive wireless tax is not the way to go about it. Cutting wireless taxes, on the other hand, would substantially benefit the low-income PG County residents considering that over 56 percent of all poor American adults had only wireless Internet service as of December 2013. (This percentage has likely increased as wireless networks and wireless plans have become more available.) Taxes on Internet access should be kept as low as possible to push prices to an affordable level so every willing consumer can get online.
Wireless networks are rapidly becoming the future of broadband throughout the United States, but high tax rates slow down the pace of deployment of wireless infrastructure. The reductions in the quantity of service demanded by consumers decrease the incentive for providers to invest in infrastructure.

The transformation in wireless networks has been incredible over the past ten or more years (2G, 3G, and 4G) as more and more consumers have demanded higher quality broadband services. For this progress to continue, state and local governments should emulate Florida’s recent legislation and substantially decrease the rates of wireless and telecommunications taxes.