Local cell phone fees face limits
Legislation is pending in Congress that could limit states’ and local governments’ access to extra revenue from taxes on cell phone use in their jurisdictions. The Wireless Tax Fairness Act of 2011 (WTFA) is currently awaiting a vote by the House, and several government associations are calling on Congress to vote it down.
If enacted, WTFA would prohibit states and local governments from imposing any new “discriminatory taxes” on mobile services, mobile service providers or mobile service property, such as cell phones, for five years after it is enacted. Supporters of the bill say it is needed to prevent state and local governments from levying what they think are excessively high taxes on their services.
The groups opposing the act, including the Washington-based National Association of Counties (NACo), wrote in a July 14 letter that WTFA would preempt local government authority and undermine their ability to recover from the recession. They also are concerned about WTFA’s definition of local taxes as discriminatory, says Mike Belarmino, NACo’s associate legislative director for finance and intergovernmental affairs.
WTFA essentially defines “discriminatory tax” as a tax that is not generally imposed, or is generally imposed at a lower rate on similar services, businesses or property. Belarmino says that the definition is not specific enough, and if WTFA passes, it could set a precedent for other industries to seek the same kind of federal protection from local tax authorities.
In Montgomery County, Md., which charges a $3.50 per cell phone per month fee, officials are concerned about WTFA, even if the money raised by the tax is just a small part of the county’s $4.4 billion budget, says Patrick Lacefield, the county’s director of public information. “We don’t like raising [taxes] any more than anybody else does, but if it’s a question [of reducing the budget more] after you’ve been reducing the budget for four or five years … the low-hanging fruit is long gone, and the middle of the tree is looking pretty sparse, too,” he says.
Along with NACo, opponents of WTFA include the Washington-based National League of Cities, the United States Conference of Mayors, the International City/County Management Association, the Government Finance Officers Association, and the National Association of Telecommunications Officers and Advisors.