House passes freeze on new mobile taxes

IDG News Service - The U.S. House of Representatives has voted to approve a five-year moratorium on new taxes targeted toward mobile services, with supporters arguing that customers pay higher taxes on their mobile plans than on most other goods and services.

The House, by voice vote, passed the Wireless Tax Fairness Act late Tuesday. The bill would prohibit new mobile-only taxes from all levels of government for five years.

A similar piece of legislation is waiting action in the Senate Finance Committee. The Senate would have to pass the bill before sending it to President Barack Obama for his signature.

U.S. consumers pay an average tax of 16.3 percent on mobile services, but only 7.4 percent on other goods and services, co-sponsor Representative Zoe Lofgren said when introducing the legislation in March. New York City mobile customers pay a 20.4 percent tax, and Baltimore customers pay 26.8 percent, she said.

The legislation "is about expanding access and innovation in our nation's wireless broadband market," Lofgren, a California Democrat, said in March. "By freezing wireless taxes and fees, we hope to spur additional consumer driven development in wireless broadband and to increase access to advanced wireless networks. This legislation is about stabilizing the wireless and giving consumers the opportunity to choose services based on the merits and not on the changing rate of taxation."

Representative Trent Franks, an Arizona Republican, is the other main co-sponsor in the House.

Several mobile carriers and trade groups applauded the House vote.

Tuesday's vote was "a victory for consumers who each year already pay more than $15 billion in extra wireless taxes and fees," Peter Davidson, Verizon Communication's senior vice president for federal government relations, said in a statement. "In these tight economic times, taxpayers are looking for some fiscal relief and the Wireless Tax Fairness Act ensures that for the next five years, they won't get socked in the wallet with new taxes on their mobile services."

The vote was also an important step forward for the U.S. economy and for broadband adoption, Davidson said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.