Phone bills stuffed full of mystery taxes, fees

Whatever ghosts and goblins came to your door Friday night, they probably weren't as mysterious as something you already have in your home — your phone bill.

At least, that's the upshot of a detailed breakdown in the latest newsletter from the Utah Taxpayers Association. In it, Mike Jerman, the association's vice president, reprinted one of his own recent phone bills and then itemized and explained it all. By his calculations, 16.6 percent of his bill went strictly to taxes.

When talk turns to tax rates, eyes tend to get heavy. But this is worth your attention. These are taxes of which you probably aren't even aware, let alone understand.

By the way, that word, "taxes," sticks in the craw of a lot of politicians. These are fees, they will say, not taxes. In a recent telephone conversation I had with Jerman, he strongly disagreed. "The original premise behind this was that utilities were imposing a burden on governments because they had to cut up roads, etc., to lay the lines," he said. "But over time, these charges have merely become a source of revenue."

A source of revenue that ought to be applied in ways that are more public.

A fee is something you pay in exchange for using a service. Jerman uses the gas tax as an example. The more you use the roads with your car, the greater fee you pay. But none of the charges tacked onto your phone bill has a thing to do with whether you use a service. You have to pay regardless.

If you'd like, get out your own phone bill and follow along.

First, you'll probably notice a federal excise tax. This, Jerman said, started in 1898 as a luxury tax when the United States declared war on Spain. To finance the war, Washington put a 1 cent tax on all telephone calls worth more than 15 cents, a luxury back in those days. Today the tax is 3 percent. It puts $6.2 billion in federal coffers every year. Yes, we all remember the Maine, but the war has been over for more than a century.

Next, you'll see state and city sales taxes. This 6.6 percent tax is applied to all charges except long-distance calls within the state. As with all sales taxes you pay on purchases, the money goes for things such as transit, the county's zoo, arts and parks tax and state and local general funds.

The federal uniform service fund is a 9.5 percent tax the federal government uses to fund telephone services, such as Internet hookups to schools and libraries in rural areas, where costs are much higher than in the cities. This tax rate tends to change fairly often.