[Congressional Record Volume 146, Number 74 (Wednesday, June 14, 2000)]
[Senate]
[Pages S5102-S5103]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   REPEAL OF THE TELEPHONE EXCISE TAX

  Mr. BURNS. Mr. President, I rise today to express my support for a 
bill which I have co-sponsored. The bill, S. 2330, will repeal federal 
excise taxes on telephone services.
  This tax was first introduced as a temporary luxury tax in 1898 to 
fund the Spanish American War. However, over 100 years later this tax 
remain in effect. The definition of temporary should not span an entire 
century.
  This tax is imposed on telephone and other services at a rate of 3 
percent. Furthermore, these taxes are not applied to a specific purpose 
that enhances telephone service in our nation--rather these taxes are 
directed in the general revenue account. In other words, there is no 
reason we shouldn't repeal this tax. It means only one thing--Montanans 
end up paying one more tax to encourage government spending.
  As I said a moment ago, this tax was enacted to fund the Spanish 
American War. Considering that war was ended a mere six months after it 
began, I feel its time to repeal this tax. Instead, Montana consumers 
continue to pay this tax on all their telephone services--local, long 
distance, and wireless.
  It is time to eliminate this excise tax. At the time of enactment, 
this tax was considered a luxury tax on the few who owned telephones in 
1898--this tax has now become an unnecessary burden on virtually every 
American taxpayer. Repealing this excise tax on communications services 
will save consumers over $5 billion annually.
  Furthermore, this tax is regressive in nature. It disproportionately 
hurts the poor, particularly those households on either fixed or 
limited incomes, Even the U.S. Treasury Department has concluded in a 
1987 study that the tax ``causes economic distortions and inequities 
among households'' and ``there is no policy rationale for retaining the 
communications excise tax.''
  Rural customers in states like Montana are also disproportionately 
impacted. This tax is even more of a burden on rural customers due to 
the fact that they are forced to make more long distance calling 
comparative to urban customers.
  This tax also impacts Internet service. The leading reason why 
households with incomes under $25,000 do not have home Internet access 
is cost. If consumers are very price sensitive, the government should 
not create disincentives to accessing the Internet. Eliminating this 
burdensome tax can help to narrow the digital divide.
  Mr. President, this is a tax on talking--a tax on communicating--a 
tax on

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our nation's economy--I encourage my colleagues to join me in support 
of this bill to repeal this unnecessary and burdensome general revenue 
tax.

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