Wireless Bills are Getting Higher? Check the Taxes.
November 19, 2015
By Steve Anderson
Contributing Writer
For most people a wireless bill's arrival is like the unwelcome arrival of a unwelcome family member; it must be endured, but seldom appreciated. A new report suggests that your wireless bill is about to get even more unwelcome, as fees and taxes are becoming a larger part of bills than ever before.
The report noted that the combination of local, state and federal fees have produced the national average wireless tax and fee level to its highest ever seen - making up 18 percent of the average bill. That's up a full percent from 2014, and nearly 2.5 times higher than the average sales tax rate.
Even with this bad news, many wireless bills have been on the decline thanks to high levels of competition in the field and average bills went from around $49.94 in 2008 to $46.64 in 2015. That's a drop around seven percent – event hough the tax rate went up from 15.5 percent to 18 percent.
The lowest taxes in the country are paid by Oregon and Nevada residents, while several states actually pay over 20 percent of bill totals in taxes, including Arkansas, Florida, Rhode Island, New York and several others. The highest taxes, meanwhile, are in Washington State, where over 25 percent of the bill is tax and fee-related. Added together, consumers are putting around $5 billion annually into the coffers of the Federal Universal Service Fund with its surcharges.
Perhaps the biggest problem is that these taxes and fees aren't taken to support general legislative activities, but rather are being used for several fairly important things. For instance, some of these fees go to augment 911 systems so that these work better with wireless systems. Wireless 911 fees range from nothing in states like Missouri but go to $3.00 a month with West Virginia. Some states have Universal Service Funds much like the federal government and this provides some extra help in development, particularly to those regions that would otherwise go without.
Higher taxes and fees, meanwhile, take otherwise discretionary income and force users to spend it elsewhere. Those who might have gone shopping, traveling, or investing are instead required to spend money on development projects for regions in which said users don't even live, or for 911 service that may never be used. Given the costs of such development projects, and the few people to share out the burden, not socializing to some degree means that many such projects wouldn't be built. Yet taxes and fees often have disproportionate impact on less wealthy citizens, as such take a larger percentage of income to pay.
It's the tradeoff that's been made since the first government arose, and one that isn't easily answered. So look for those fees and taxes to stay a big part of a wireless bill for some time to come.
Edited by Stefania Viscusi