April 16, 2006
U.S. May Stop, Refund Excise Tax On Phone Service
The Treasury Department, following a series of hostile court rulings on the way it assesses the federal excise tax on phone service, is working on a plan to stop collecting the levy and refund billions of dollars to consumers and businesses, according to people familiar with the matter. The WSJ reports.
... "Elimination of the excise tax would be a major victory for the telecommunications industry, which has fought for years in court and on Capitol Hill to do away with the surcharge.
Government officials are holding closely guarded discussions on how to best handle the repayment process as well as mitigate the impact of about $60 billion in potential refunds and lost federal revenues over the next five years. The surcharge would likely disappear from long-distance and wireless bills, but local-call levies could remain.
The law -- originally enacted to help pay the costs of the Spanish-American War -- taxes telecom services based on both the duration of a call and the distance it travels. But the changing nature of technology now lets phone companies offer flat rate per minute or monthly plans. The government, however, has continued to assess the tax under the old services, sparking widespread protest".
Related article:
-- 3 Percent Fee On Cell Phones Started 107 Years Ago - According to Channel 5 News, there is a 3 percent fee on every cell phone bill in America. The origin of the tax predates the invention of the cellular phone by nearly a century and supportis the war effort -- the Spanish-American War.
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