OMG! Cell phone users in California are in disbelief that state regulators want to tax their text messages.
A new surcharge proposed by the California Public Utilities Commission (CPUC) wouldn’t be a per-text tax, but rather a flat monthly fee based on a cellular bill that already includes fees for text message services.
Many carriers already offer a flat fee option for texting, and charge a similar fee for other services that are incorporated into the bill, such as simple phone calls. The exact amount of the tax would vary from carrier to carrier, too.
The goal of this tax proposal is to generate more funds for programs that provide telecommunications services to under-served residents of the state, such as subsidized cell phones to low-income families. California’s Public Purpose Program budget has continued to increase — while incoming fees to fill it have been decreasing. The current surcharge rate is less than seven percent, reports CNN.
The California commission will vote on the measure on January 10, 2019. Not only are cell phone users angry, the proposal will face strong opposition from industry trade groups — like the Cellular Telecommunications Industry Association (CTIA), which represents major carriers AT&T, Mobility, Sprint, and T-Mobile. The CTIA has already submitted a legal filing arguing against the proposal, noted the Orange County Register.
California is considering a tax on text messages.
— Tax Foundation (@taxfoundation) December 12, 2018
“We hope that the CPUC recognizes that taxing text messages is bad for consumers,” said Jamie Hastings, senior vice president of external and state affairs for CTIA. “Consumers exchanged 1.77 trillion messages in 2017, making text messages one of the most common and effective means of communication for Americans. Taxing this service would burden those who rely on and use this service each and every day.”
According to USA Today, mobile phone users’ phone call activity has decreased significantly, meaning voice call revenue for state programs has declined by one-third, too — from $16.5 billion in 2011 to $11.3 billion in 2017. But the budget for subsidizing poorer users has risen by almost half, from $670 million in 2011 to $998 million in 2017.
Another hurdle the proposal faces is a new ruling handed down by the Federation Communication Commission. That rule classifies text messages as an “information service,” much like an email. The CTIA has indicated that the proposal also is an unfair practice among major carriers, and those cell phone providers who do not charge for texts.
“Subjecting wireless carriers’ text messaging traffic to surcharges that cannot be applied to the lion’s share of messaging traffic and messaging providers is illogical, anti-competitive, and harmful to consumers,” the CTIA said in its filing.