Utah's wireless service tax among highest in U.S.

Published: Sunday, Feb. 10 2013 6:54 p.m. MST

The taxes Utahns pay for the right to use a cell phone are among the highest in the country, according to a study.

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SALT LAKE CITY — The taxes Utahns pay for the right to use a cell phone are among the highest in the country, according to a study published by the Tax Foundation, a Washington, D.C.-based think tank.

Utah reported the 13th highest combined cell phone tax rate in the United States at 18.49 percent and was singled out in the study for levying obscure taxes to raise revenue without encountering opposition.

"Utah uses what they call a wireless 'fee' to fund its poison control centers, but the levy is really a tax because the government service benefits the general public regardless of cell phone ownership or usage," the report said.

Royce Van Tassell, vice president of the Utah Taxpayers Association, said he's disappointed that there isn’t a stronger connection between the source of revenue and Utah's poison control service. 

"This is a great example of legislators being very creative at avoiding accountability. It should be clear who is paying the tax and what use it's going for," Van Tassell said. "I hope the state Legislature will decide to give [the report's findings] a serious look."  

Scott Drenkard, an economist with Tax Foundation, said state and local agencies frequently double-tax cell phone bills.

"One of the reasons that there are such high rates is that various entities are allowed to overlap," he said.  

According to Drenkard, most American phone bills include at least a local utility tax, wireless tax, local 911 tax, state 911 tax, Universal Service Fund tax and a telecommunications relay services tax. 

Tax Foundation, a non-partisan group, found that most state and local governments conceal the tax within the overall price of the monthly charge, making it nearly impossible for the average consumer to notice. 

The number of American cell phone subscribers has more than quintupled since 1997. The Tax Foundation said the relative newness of the industry has resulted in consumers who are more naive about the charges on their wireless bill than they would be about most other services.

"If people aren't paying attention and it's growing fairly rapidly, it's an effective, stealthy way to extract revenue," Drenkard said. "It wasn't surprising to find these results, but it's certainly concerning. … These charges need to be made more publicly available."

Nebraska reported the highest combined cell phone tax in the United States at 24.5 percent. Oregon collected 7.67 percent, the lowest total. In all, seven states charge combined rates above 20 percent.   

E-mail: blockhart@deseretnews.com, Twitter: @benlockhart89

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