Government entities at all levels levy a lot of taxes on fees on wireless services. As it becomes near ubiquitous, policymakers look at these services as a giant cash cow to collect revenue, while forcing wireless providers to collect and bear the brunt of the consumer’s anger.
Cell phone taxes and government fees make up about 22.6% of the average customer’s bill, according to the national Tax Foundation. That’s up from 21.7% the year before. Wireless customers across the country will pay an estimated $17.5 billion in taxes and fees to federal, state, and local governments.
Utah ranks far higher than the national average, at 26.47%, which is 7th highest in the nation. Utah also far exceeds any of our surrounding states in levying taxes on this type of service. Three of Utah’s nearby states (Idaho, Oregon, and Nevada) all rank at the bottom of the list.
As an example, let’s take a consumer with a single line of service, with the address based in Salt Lake City. If the service plan costs $80, taxes, fees, and surcharges that go to government total $4.12.
While the amount and the taxes and fees differ from city to city, here are a few you might see when you examine your cell phone bill.
- The Universal Service Fund (USF) fee – this levy is applied by the Federal Communications Commission (FCC) to help fund projects that make cell phone coverage and high-speed internet available across the entire country. This includes very remote areas where few, if any people reside.
- City Gross Receipts Tax is similar to the sales tax you pay. However, this is levied upon businesses that provide a good or service. This is a perfect example of a tax on a business being passed along to the consumer.
- State and local sales tax are the traditional rate we all pay for goods and services.
- The State Universal Fund fee is nearly the same purpose as the USF issued by the FCC, except created to bolster statewide cell phone and broadband coverage.
- DEAF Surcharge -the revenue from this fee goes to pay for services for those who need additional services due to hearing issues. For example, Relay Utah.
- Poison Control Surcharge – pays for the poison control dispatch center.
- Utah Radio Network Charge – the Utah Communications Authority is working to upgrade radio networks to ensure emergency services are working off the same radio network to delay emergency response times and coordinate with other agencies.
- 911 Taxes -This can be levied by both cities and the state. These go to partially fund the dispatch centers for emergencies. The Utah 911 Emergency Service charge was recently increased from 9 cents to 25 cents. This bill was passed by the Legislature in 2019.
With state and many local governments and quasi-government entities saying they are struggling to maintain emergency funding, the growing wireless industry and its customers are attractive targets for raising new revenue.
This is ill-advised and should not be looked at as an easy fix for funding problems. Utah state and local government leaders should study our existing communication tax burden and consider policies that transition away from raising wireless taxes and fees further and instead pay for essential services through general fund sources.