Pennsylvanians are paying more taxes on their cellphone bill than all but one of their neighbors and significantly more than the national average. That’s according to a report by a nonpartisan tax policy research group.
The combined local, state and federal taxes on a resident’s cellphone bill is 25.4 percent. The Washington-based Tax Foundation noted that was the seventh-highest rate in the nation. Excluding the federal 9.1 percent rate, Pennsylvania’s state and local tax is slightly more than 16.3 percent.
A state resident who has a $100 monthly bill from their wireless provider pays more than $304 in taxes per year. The average U.S. resident pays about $260 annually in local, state and federal levies.
“It’s important that people keep an eye on these things because they are well-hidden within people’s phone bills,” said Ulrik Boesen, a senior policy analyst for the foundation.
Two things stand out regarding Pennsylvania’s higher than average costs. First, Boesen said Pennsylvania charges a 5 percent gross receipts tax that’s in addition to the 6 percent sales tax.
Telecommunications is one of five industries on which Pennsylvania levies a gross receipts tax. The others include electric utilities providers, transportation companies, private bankers and managed care organizations.
The other surcharge that Boesen noted was the $1.65 monthly fee for state wireless 9-1-1 service. That represents a tax rate of nearly 4.4 percent. By comparison, Ohio’s charge is just 25 cents per number per month for state and local wireless 9-1-1.
While 9-1-1 is an essential service for residents, Boesen said that doesn’t mean it should have its own tax.
“In general, we don’t like when you have specific taxes for specific services,” he said. “We like it more when you broaden your tax bases to be as broad as possible and as low-rate as possible.”
A year ago, Pennsylvanians were paying a rate of 22.9 percent, but the bulk of that is due to a nearly 2.5 percent increase in the federal surcharge, which provides funding for certain organizations, such as schools and hospitals, in communities with higher than normal costs. The federal tax also can assist low-income residents in those areas.
Among neighboring states, only New York residents paid a higher percentage of taxes, as its 18.7 percent state-and-local rate ranks fourth in the U.S. Maryland was also in the top half of states at 14.7 percent, 14th highest.
West Virginia was 32nd overall at 10.2 percent, New Jersey landed at 38th at 9 percent, and Ohio residents pay 8.5 percent in state and local taxes, which ranked 43rd. Delaware’s rate of 6.6 percent is 49th in the study, which also includes Puerto Rico and the District of Columbia.