Wireless Tax Burdens Rise for the Second Straight Year in 2016
Taxes and fees on wireless consumers increased to a record high 18.6% of the average U.S. customer’s monthly bill. In just two years, the average wireless tax burden has increased by 1.5 percentage points, and wireless taxes are now 4.5 percentage points higher than they were ten years ago. A typical American household with four wireless phones paying $100 per month for wireless voice service is now paying nearly $225 per year in taxes, fees, and government surcharges.
Wireless industry competition has led to significant reductions in average monthly bills from $46.44 per month in 2015 to $44.65 in 2016. Since 2008, average monthly bills have dropped from just under $50 per month to $44.65 per month – an 11% reduction – while taxes and fees have increased from 15.1% to 18.6% – a 23% increase. Unfortunately, consumers are not enjoying the full benefit of these price reductions because of the growing tax burden on wireless service. Taxes are growing at a rate twice as fast as average wireless prices have been falling.
Wireless service is increasingly the sole means of communication and connectivity for many Americans, particularly those with lower incomes. At the end of 2015, according to the Centers for Disease Control, more than 64% of all poor adults had only wireless service and more than 48% of all adults of all incomes were wireless only. Excessive taxes and fees, especially regressive per-line taxes, impose a disproportionate burden on low-income consumers.