[Congressional Record Volume 153, Number 1 (Thursday, January 4, 2007)]
[Senate]
[Pages S163-S164]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN (for himself, Mr. DeMint, Mr. Smith, and Mr. 
        Sununu):
  S. 166. A bill to restrict any State from imposing a new 
discriminatory tax on cell phone services; to the Committee on Finance.
  Mr. McCAIN. Mr. President, I am pleased to be joined by Senator 
DeMint

[[Page S164]]

in introducing the Cell Phone Tax Moratorium Act of 2007. This bill 
would put a stop to new discriminatory taxes on cell phone services for 
a period of 3 years.
  The average general sales tax in the U.S. today is around six 
percent, but the average State and local taxes and fees on cell phone 
service comes in at about 17 percent. Consumers are left paying a hefty 
portion of their monthly cell phone bill to the Government for what 
many believe is their most important communications device.
  The National Conference of State Legislatures and the National 
Governors' Association have issued policy positions calling for states 
to eliminate excessive and discriminatory taxes on communications 
services. State and local governments have been working with the 
telecommunications industry to find a solution to these excessive 
taxes, but no agreement has been reached. During the three year 
moratorium, it is my hope that State and local governments--in 
cooperation with industry--will work to eliminate discriminatory taxes 
and fees on wireless services.
  Excessive taxes dampen innovation, and are regressive, hitting the 
most vulnerable customers the hardest. Although more then 72 percent of 
all Americans own a cell phone, 26 percent said they could not live 
without it because it is their only communications source, according to 
a recent Pew Internet and Life Project report. Cell phone only owners 
are often those who find it difficult to afford a wired and a wireless 
phone. Additionally, according to the same report, 74 percent of the 
Americans say they have used their cell phone in an emergency and 
gained valuable assistance.
  Some State and local governments cannot move beyond the idea that 
wireless services are some kind of luxury item that can be taxed at a 
higher rate. These services may have been a luxury item many years ago, 
but due to deregulation wireless services are more affordable than ever 
and even necessary for personal or business reasons. This is why it is 
perplexing that some states burden cell phone subscribers with taxes 
and fees that can be as high as 24 percent of a consumer's total bill.
  Tax rates as high as this are generally associated with cigarettes 
and alcohol and known as ``sin taxes'' designed to reduce consumption. 
I cannot imagine it is the intention of states and localities to reduce 
consumption of wireless services.
  Mindful of the revenue requirements of States and localities, this 
bill does not eliminate existing discriminatory taxes. Nor does the 
bill prohibit states and localities from imposing new taxes on wireless 
services that are not discriminatory. The bill simply puts a stop to 
the creation of new discriminatory taxes on cell phone services.
  Last year I introduced similar legislative language during a mark-up 
in the Senate Commerce Committee. The amendment passed with a vote 21-
1. I am hopeful that this bill will once again be supported by the 
Commerce Committee and that it will be approved by the full Senate. I 
ask my colleagues to join me in ending the discriminatory sales taxes 
on this very popular communications service.
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