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California Hopes to Tax Text Messages: What? Who? Why?
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California Hopes to Tax Text Messages: What? Who? Why?

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California residents may be facing yet another tax….this time for every text they send. Soon, Californians may have to think twice before texting.

The proposal was filed by California's Public Utilities Commission (CPUC), a group that regulates public utilities operating in the state. In addition to communications services, such as cell phone carriers, the group is also responsible for regulating energy, water, and transportation over rail systems, and passenger cars.

“From a consumer’s point of view, surcharges may be a wash, because if more surcharge revenues come from texting services, less would be needed from voice services,” a CPUC spokesperson said in a statement. “Generally, those consumers who create greater texting revenues may pay a bit more, whereas consumers using more voice services may pay less.”

Why did they decide to do it?

The proposal hopes to use the tax to help support programs that make phone service accessible to the poor.

As mobile phone users shifted from making phone calls to using messaging services to communicate, voice call revenue for these state programs has dropped by roughly a third, from $16.5 billion in 2011 to $11.3 billion in 2017, according to filings from the commission. 

A texting surcharge could help sustain the Public Purpose Program budget, which has risen to $998 million in 2017 from $670 million in 2011, according to a report from the California Public Utilities Commission.

“Parties supporting the collection of surcharges on text messaging revenue argue that it will help preserve and advance universal service by increasing the revenue base upon which Public Purpose Programs rely. We agree,” CPUC stated in its findings.

Business groups, including the Bay Area Council, California Chamber of Commerce and Silicon Valley Leadership Group and others opposing the idea, calculated the new charges for wireless consumers could total about $44.5 million a year, according to the Mercury News.

Who is going to be taxed?

It’s not entirely clear yet.

Jim Wunderman, president and CEO of the Bay Area Council, a California business advocacy group, said he found the details vague.

“It’s a dumb idea,” he said. “This is how conversations take place in this day and age, and it’s almost like saying there should be a tax on the conversations we have.”

“I don’t know how clear the CPUC has been with answering these questions,” Wunderman said. “Does the sender pay? Does the receiver pay? What if you move out of state but you keep the California number? What if you drive down to Reno, Nevada and get a phone? Can you avoid the charge then? These are all things that would be really hard to resolve.”

What would be taxed? 

According to the filing, the CPUC is proposing to tax traditional SMS or MMS text messages. Unlike iMessages on iPhones or using the text feature in WhatsApp, the texts the CPUC would tax are ones sent over a mobile phone’s built-in messaging app.

Moreover, the CPUC is also seeking to retroactively tax users for the last five years, USA Today reports. It means that under the current filing the tax would be retroactive to five years ago though exact details on what would be charged and how are unclear.

The CPUC hasn’t revealed how much the tax would be, but in its filing, it refers to the fee as a
“surcharge” instead of a tax on a particular number of text messages sent or received.

Surcharges are common for cell phone users, with a number of these types of fees at the bottom of their bills, often with each charge running less than a couple of dollars a month per user (exact taxes and fees may vary by state).

Wunderland said no matter how much the tax would be, charging customers for text messages feels “wrong” and “mean-spirited.”

“Texting is a way of life for almost everybody. It’s such basic communication,” Wunderland said.

Mercury News reported that it’s not quite a lump of coal, but California regulators may dampen holiday spirits early this year by approving the controversial tax on text messaging.

 

Author: USA Really