Ever wonder what those extra charges are on your account?
A few of our clients did too, so we thought it would be extremely helpful to share with everyone how all those extra fees end up on your bill every month. Let’s get started:
The CITA (cellular telephone industry association) has a great overview of the extras and where they came from.
Please note that many of these charges are cost recovery charges (sheez! Sure wish we could charge those) for government programs and for some not so government programs.
The following are excerpts from CTIA.org
Wireless costs have dropped nearly 80 percent over the last 10 years, but the typical wireless consumer now faces more than 16 percent on average in taxes, fees and government surcharges on his or her wireless service – that’s more than twice the average tax rate (about 7%) for other general goods and services in this country. Click here to view a new 50 State Ranking for highest wireless taxes and fees levied upon consumers.
The effective rate of taxation on wireless services has increased three times faster than the rate on other taxable goods and services between 2007 and 2010, resulting in billions (the annual consumer tax burden is about $21 billion) in excessive tax costs for wireless consumers.
By the numbers:
- Consumers in 47 states and the District of Columbia now pay wireless taxes, fees and government charges that exceed the general retail sales tax rate.
- The average consumer pays 16.3 percent of their wireless bill in combined federal, state and local taxes, fees and surcharges each month.
- For other goods and services, the average tax rate is only 7.4 percent.
- Wireless tax rates in many states (22 of them and D.C.) have hit double digits, with some states (5 of them) breaking the 20 percent mark in monthly taxes and fees when federal, state and local are combined.
More important points to consider:
- Because discriminatory, new state and local taxes and fees on wireless services are typically regressive – and significantly increase consumers’ cost of service – the burden often falls especially hard on fixed-income users such as seniors, minority communities, working families and small businesses.
- Too often, this hefty tax bite puts wireless services out of reach for far too many who have come to rely upon its value, convenience and safety as the preferred communications tool for their daily lives. Wireless must remain affordable and accessible for ALL Americans.
- The wireless industry agrees that you’re paying too much in taxes and fees, and if you’d like to learn more about what you can do to change that, check out www.mywireless.org.
Each wireless fee, explained
Here are some helpful and concise definitions on wireless taxes from My Wireless’ website:
Almost everyone pays state tax on their bill, and many consumers have to pay local taxes imposed by cities and/or counties. You used to pay a federal excise tax (FET), too, but the wireless industry led the charge to get rid of that tax that was first instituted in 1898 to fund the Spanish-American War. With the help of mywireless.org, wireless consumers told policymakers what they thought of this excessive and unnecessary tax. After more than 100 years in existence, the FET was finally abolished in 2006, proving that your voice and the wireless industry really can make a difference.
Universal Service Fund
Everyone pays into the universal service fund, which is a system the federal government set-up to help subsidize telecommunications service primarily in high cost areas, low-income areas, in rural healthcare facilities, and schools and libraries. Your state might also collect money to support its own universal service fund.
Regulatory Program Costs
These are fees collected by your carrier to help cover the costs related to funding and complying with government mandates or programs. Carriers are allowed by law to assess these fees. An example of one such fee is Wireless Number Portability, which is the federally-mandated program that allows you to keep your old phone number when you change service providers if you want to.
My Wireless is an excellent source of wireless information for consumers and businesses alike. Click here to look up your state’s specific wireless stats.