Statement of Judiciary Committee Chairman Lamar Smith Full Committee Markup of H.R. 1002, the “Wireless Tax Fairness Act of 2011”

Statement of Judiciary Committee Chairman Lamar Smith
Full Committee Markup of
H.R. 1002, the “Wireless Tax Fairness Act of 2011”

Chairman Smith: Almost all adult Americans now own a mobile telephone and subscribe to wireless telecommunications services. 

Mobile phones have become a critical communication tool for most social and business transactions. 

New smart-phone technology even allows subscribers to stream movies and download music to their mobile phone.

As wireless services have simplified American life, consumers’ cell-phone bills have become increasingly complicated.  Many state and local governments impose excessive fees, taxes, and other charges on wireless subscriptions that are not imposed on other goods and services.

A recent study showed that between 2003 and 2007, state and local taxes on wireless subscriptions increased four times faster than the sales tax rate on other goods and services. 

In my home state of Texas, the average combined state and local tax rate on wireless services is about four percent higher than our sales tax. 

I am an original cosponsor of the Wireless Tax Fairness Act and I commend Ms. Lofgren and Mr. Franks for their bi-partisan effort to enact this legislation.

This bill freezes state and local government taxes on wireless services for five years. 

The National Conference of State Legislatures and the National League of Cities have admitted that states need to reform their wireless tax policies.  This bill gives states the breathing room to do so and prevents new discriminatory taxes in the interim.

State and local revenues should not be affected by this legislation because its relief is prospective only.  Under the bill, states are still free to raise taxes on wireless subscriptions as long as the tax hike is generally applicable to all goods and services. 

This legislation simply promotes tax fairness; it does not tell states what tax rate they must impose on wireless subscriptions.

The wireless industry continues to deliver new benefits that enhance our social and business communications on almost a daily basis.  Discriminatory state tax policies stifle that innovation. 
I encourage my colleagues to support the Wireless Tax Fairness Act.