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Public Statements

Wireless Tax Fairness Act of 2011

Floor Speech

By:
Date:
Location: Washington, DC

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Ms. CHU. Mr. Speaker, I yield myself such time as I may consume.

H.R. 1002, the Wireless Tax Fairness Act of 2011, will impose on States a 5-year moratorium on any new tax on mobile services, mobile service providers, and mobile service property. This will deny States the flexibility to respond to economic downturns during the moratorium and, therefore, undermine the ability of States to pay for essential services such as public health and safety, education and maintenance of State highways.

The legislation is based on faulty information and will benefit the wireless services industry. Further, the legislation contains vague language which will lead to increased litigation for both State and local governments and the wireless industry. Because of these and other concerns presented by the bill, many organizations are opposed, including the League of Cities, National Governors Association, the American Federation of State, County and Municipal Employees, the AFL-CIO, AFT and NEA, amongst others.

Why are they opposed?

Because, first, this bill will force States to cut services and increase taxes on nonwireless taxpayers.

In order for States and local communities to continue to recover from this recession, they need all tools at their disposal to balance their budgets, to preserve and create jobs, and to provide essential services like police, fire, and education.

In fact, demand for many of the essential services, such as unemployment payments and other social programs, has increased during the economic downturn. Yet this bill takes away one of the tools to tax the wireless industry at the expense of other taxpayers and businesses. The moratorium will exclude from possible State taxation millions, if not billions of dollars, in future revenue from wireless service taxes. Thus, to balance their budgets, States will be forced to cut even more services and shift more of the tax burden on to other local taxpayers.

As a former member of the California Board of Equalization, the Nation's duly elected statewide tax board, I understand the unique fiscal challenges facing our Nation today and believe we should leave local taxes in the hands of local officials and residents.

Finally, State legislators and local officials who are elected by their constituents and accountable to them have decided to impose these taxes. By passing this legislation, Congress impedes upon local elections and is telling local governments how to run their budgets.

A second reason for opposition is that this bill is a special interest bill for the wireless industry. It benefits the wireless services industry at the expense of other industries. Despite industry claims, this bill will not lead to more broadband development and competitiveness. Current State and local taxes on wireless services and providers have not diminished adoption rates, nor have they inhibited broadband expansion.

In fact, the wireless industry has not yet presented any data indicating that State and local wireless taxes have had adverse effect on wireless subscribership, revenue, or investment. Instead, the wireless industry continues to grow and profits remain high.

If this bill becomes law, it would set up a dual tax system on telephone services by giving preferential treatment to cell phone customers but continue to allow taxes on traditional wire-line phones. This will put a higher burden on those without cell phones.

Finally, vague definitions within this bill will lead to increased litigation. H.R. 1002 will increase litigation costs for wireless service providers and State and local governments. Courts will have to interpret the many vague terms that are contained within the bill.

I reserve the balance of my time.

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