(The Center Square) – Louisianans are paying more in cellphone taxes this year while the price of cellphone service continues to drop.
The finding comes from the Tax Foundation, a Washington-based policy think tank that has been tracking wireless taxes, fees and government surcharges since 2003.
The group’s newly released study of state wireless tax rates shows an inverse relationship between the cost of consumer cell phone plans nationwide, and the taxes added to them.
“Fortunately for wireless consumers, the per-line price for wireless service continues to fall,” the study said, adding, “Unfortunately, this price reduction for consumers was partially offset by higher taxes.”
The study cites data from CTIA, a national wireless industry association, showing that average monthly revenue per subscriber has dropped 30% since 2008. “However, during this same period, wireless taxes, fees, and government surcharges have increased from 15.10 percent to 24.96 percent of the average bill,” the study said.
Researchers explained a family with four cell phones on a “family share” plan paying $100 per month for cell phone service, also would pay $300 a year in taxes – up from $270 in 2020. The average annual tax burden is roughly equivalent to three months of wireless service costs.
A breakdown showed Louisiana cell phone users fare better than most states, ranking 35th out of 50 states, the District of Columbia and Puerto Rico on a list of highest wireless tax rates.
Louisiana has a 10.08% state and local wireless tax rate, the study showed, that when combined with an 11.8% federal tax, known as the Universal Service Fund (FUSF), yields a 21.87% tax on Pelican State cellphone users. The national average was 25%.
Study authors pinpointed the tax increase as coming from an escalating federal tax burden applied nationwide.
“The rate of the FUSF surcharge has increased dramatically since 2018, from an effective rate of 6.6 percent in 2018 to 11.8 percent in 2021,” they said.
The issue disproportionately affects low-income individuals and families, researchers claimed, because nearly three-fourths of economically disadvantaged people use cellphones as their primary telecommunications service.
“The regressive nature of wireless taxes creates significant burdens on low-income consumers,” the study concluded, while warning against the potential for future internet use taxes.
“Without the protection of the federal law, the high excise tax rates applied to taxable wireless services could be applied to internet access, and consumer tax burdens would be significantly higher,” the study said.