AUSTIN – A report released today by the Texas Public Policy Foundation underscores how important it is that the Texas Legislature cut taxes on telecommunications services this session.
“A Texas consumer that has a home telephone, a cell phone, and cable television service pays an average of $26.51 per month – just for taxes,” said Bill Peacock, Director of the Foundation’s Center for Economic Freedom. “This combined tax rate of nearly 19% ranks Texas among the three highest states in telecommunications tax burden.”
The report, “Taxes and Fees on Telecommunications Services in Texas,” was authored by Paul Bachman, Sarah Glassman, and David G. Tuerck of The Beacon Hill Institute at Suffolk University, which specializes in the development of state-of-the-art economic and statistical models for policy analysis. Bachman, the Institute’s Director of Research, also serves as a Senior Fellow for the Texas Public Policy Foundation.
The report analyzed the monthly taxes and rates on various telecommunications services in 12 Texas cities. Texas wireline telephone consumers paid an average tax rate of 22.3%, compared against a national average of 17.23%. Texas wireless telephone consumer paid an average tax rate of 19.25%, compared against a national average of 11.90%. Texas “Voice Over Internet Protocol” (VOIP) subscribers paid an average tax rate of 16.40%, while Texas cable customers paid an average tax rate of 14.33%.
By contrast, subscribers to satellite television services (such as DirecTV or Dish Network) paid only the state sales tax rate of 6.25%. But rather than trying to apply the tax structure for traditional telecommunications services to such new technologies, the report recommends that Texas remove the special taxes applied to only the traditional services so that consumers will not face higher costs and that market innovation will not be hindered.
Peacock urged the Texas Senate to approve HB 735 by Rep. Joe Straus, which would repeal the 1.25% Telecommunications Infrastructure Fund tax on wireline and wireless phone services. He also urged the House to pass HB 986 by Rep. Carl Isett, which would end the double taxation of these same services.
“Passing these two bills will reduce the tax burden on Texas consumers and make the Texas telecommunications market more competitive with other states,” Peacock said.
The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin. The report may be downloaded from the Foundation’s website, www.TexasPolicy.com.
– 30 –