Earlier this week, Florida Governor Rick Scott announced his plan to cut $470 million in cellphone and television taxes. The plan would decrease tax rates on cellphones and television by 3.6 percent and would save the average Florida family $43 a year. Currently, Florida residents pay the fourth highest wireless tax rate in the country when including federal, state, and local taxes. Only New York, Washington, and Nebraska have higher wireless tax rates.
This proposal from Governor Scott is a step in the right direction towards incentivizing more Florida residents to adopt Internet service. As I wrote in an October 2014 blog, wireless taxes are very regressive because over 56 percent of all poor American adults had only wireless service as of December 2013. It is important that taxes on Internet access are as low as possible in order 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, 4G), as more and more consumers have demanded higher speed services. For this progress to continue, more states should adopt similar plans to Governor Scott’s and substantially decrease the rates of wireless taxes.