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Released: July 15, 2011

A 20% tax on cellphone service?

Source: Annamaria Andriotis, Wall Street Journal (Paid Registration)

As lawmakers consider raising taxes as part of the current deficit-reduction talks, a separate bill moved one step closer to giving consumers a much-needed break -- on their cellphone bills. On Thursday, the House Judiciary Committee voted in favor of sending the Wireless Tax Fairness Act to the full House for a vote. A date for that vote hasn't been set yet. The bill calls for a five-year freeze on tax hikes and the introduction of any new taxes and fees on mobile devices which have a service plan, including cellphones, smartphones and tablets. Consumers currently pay about $92 a year on average, or 16.3% of their total bill, in taxes as part of their cellphone plan -- the highest amount ever, according to the Heartland Institute, a public policy research organization. That's up from a 14.1% tax rate in 2006. "That's a huge amount -- it's really going to knock you," says Brian Johnston, director of advocacy at MyWireless.org, a nonpartisan nonprofit organization in favor of consumer-friendly wireless policies.

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