Each year The Tax Foundation releases a report detailing the changes to wireless taxes and fees, their report may surprise you! We’re here to break down the good, the bad, and the ugly of wireless taxes and fees for 2018.
The Good: Lower Average Monthly Phone Bills
We have good news, the cost of average monthly mobile phone bills actually decreased. In fact, this trend of lower wireless phone bills has continued since 2008. Why is the cost of wireless service going down? Healthy competition among wireless providers. When wireless companies compete, consumers get lower prices
The Bad: Higher Wireless Taxes and Fees
The bad news is…wireless taxes and fees rose again in 2018. Unfortunately, most consumers are unable to recognize the benefit of cheaper wireless bills because of the steady increase in taxes and fees. In 2018, the average family paid about $229 in taxes and fees alone, meaning that taxes and fees make up about 19.1 percent of an average phone bill, jumping from 18.5 percent last year.
The Ugly: A Disproportionate Burden
High taxes and fees on wireless service disproportionately affect lower income Americans, especially the 68 percent of lower income adults who rely solely on wireless for their phone service. Burdensome per line fees in some states could cost families $500 per year, which is up to 40 percent of the entire phone bill. Last year we pointed out that wireless consumers are often an attractive “solution” for many local and state government facing ongoing revenue challenges. These excessive taxes and fees often put the tax burden on those least able to afford them.
How does your state rank?
Curious about how your state ranks in wireless taxes and fees compared to others? If you live in Illinois, Alaska, Washington, or Nebraska, you pay the highest in wireless taxes in the country. If you live in Oregon, Idaho, or Nevada you are among the lowest. Check out the chart to see the full breakdown.
Another side effect other than damage to our pocketbook? Higher taxes on wireless service, coupled with increased taxes on wireless investments, may lead to slower deployment of wireless network infrastructure, including fifth generation—5G—wireless broadband technologies. That’s bad news all around, considering the tremendous benefits we anticipate from 5G.