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CA may start taxing text messages

Text messaging (Pexels/Released)
December 14, 2018

California is considering adding a tax on text messaging that would fund phone service for low-income residents.

On Tuesday, California state regulators released a California Public Utilities Commission (CPUC) report stating that the tax would be issued in a monthly tax as opposed to a tax affixed to each text message, according to The Hill.

Estimates are that the tax would cost taxpayers $44.5 million each year, Newsweek reported.

The report said the revenue that is generated from the current tax in the telecommunications sector is dwindling and that a new text messaging tax needs to be enforced to compensate for it.

State and wireless carriers object to the proposal, which will come to a vote in Jan. 2019.

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President of business advocacy group the Bay Area Council, Jim Wunderman, said, “It’s a dumb idea. This is how conversations take place in this day and age, and it’s almost like saying there should be a tax on the conversations we have.”

CPUC spokeswoman Constance Gordon said, “From a consumer’s point of view, surcharges may be a wash, because if more surcharge revenues come from texting services, less would be needed from voice services. Generally, those consumers who create greater texting revenues may pay a bit more, whereas consumers using more voice services may pay less.”

Currently, California’s Public Purpose Program imposes a tax on utilities, a charge which also includes their landline services. The program’s budget was $670 million in 2011, but by 2017, it had increased to almost a billion dollars. Meanwhile, there has been a sharp decrease in telecommunications industry revenues.

A February Pew Research report said that 95 percent of Americans own a cell phone and 77 percent have a smartphone.

The report states, “Parties supporting the collection of surcharges on text messaging revenue argue that it will help preserve and advance universal service by increasing the revenue base upon which Public Purpose Programs rely. We agree.”

“Diminishing industry revenue and increasing Public Purpose Program budgets over time has resulted in continuous increase to the surcharge rate. This is unsustainable over time,” the report added.

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The CTIA, representing major wireless companies, said, “the tax is anti-competitive and would put carriers at a disadvantage against social media messaging apps from tech companies such as Google and Facebook.”

“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, anticompetitive, and harmful to consumers,” the CTIA said.