California regulators are weighing a flat tax on text messaging which would help fund a program to make phone service available to low-income residents, according to the San Jose Mercury News, citing a 51-page report released by the California Public Utilities Commission (CPUC).
The tax would likely be a flat fee added to a customer's monthly bill, instead of a per-text tax - and could be applied retroactively for five years.
“It’s a dumb idea,” said Jim Wunderman, president of the Bay Area Council business-sponsored advocacy group. “This is how conversations take place in this day and age, and it’s almost like saying there should be a tax on the conversations we have.” -Mercury News
Several business groups have opposed the idea, including the Bay Area Council, California Chamber of Commerce and Silicon Valley Leadership Group, among others, who calculated that the new tax would cost wireless customers around $44.5 million per year.
According to the CPUC, the surcharge could help keep the low-income assistance Public Purpose Program budget afloat, which has risen to $998 million in 2017 from $670 million in 2011. That said, telecom industry revenues which have funded the program have fallen from $16.5 billion in 2011 to $11.3 billion in 2017 according to the report.
"This is unsustainable over time," notes the report, which argues that a text message tax will boost revenue that would help low-income Californians afford phone service.
“From a consumer’s point of view, surcharges may be a wash, because if more surcharge revenues come from texting services, less would be needed from voice services,” said CPUC spokeswoman Constance Gordon in a statement. “Generally, those consumers who create greater texting revenues may pay a bit more, whereas consumers using more voice services may pay less.”
Wunderman said he’s unaware of any other local, state or federal program that taxes texting. And the wireless industry has argued the state commission even lacks legal grounds for doing so. -Mercury News
A trade group representing the wireless industries, CTIA, said in a legal filing to the commission that texting is an information service and akin to email, versus a telecommunications service subject to the agency's legal authority to tax services. The trade group added that a tax on text messages would put wireless carriers at a greater disadvantage to alternative messaging platforms such as WhatsApp, Facebook Messenger and Apple's iMessage.
"Subjecting wireless carriers' text messaging traffic to surcharges that cannot be applied to the lion's share of messaging traffic and messaging providers is illogical, anticompetitive and harmful to consumers," reads the CTIA's filing.
The CPUC report can be found below.