Text message tax could cost California consumers $4.4M annually
SAN JOSE, Calif. (KTVU) - California residents could be hit with a new tax. But this wouldn’t affect their wallets, it’s aimed at consumer’s cell phones. Texting has become such a staple of communication, one California agency now seeks to generate revenue by setting up a text tax.
“I think it’s crazy. We’ll protest. we’ll protest….where do we protest?,” said Los Gatos residents Hank and Lynn Ceranko, after the heard the news via local media.
In a 52-page proposal, retiring PUC Commissioner Carla Peterman proposes adding a text messaging fee to cell phone bills. That money would supplement the Public Purpose Program account, which insures lower-income residents have access to the same level of cell service as everyone else.
Multiple organizations, not just people, oppose this idea, which could cost California consumers $44 million a year. If it’s applied retroactively, which is in the proposal, then the cost goes up to a couple hundred million dollars.
“The public purpose program fund has, already, one billion dollars,” said Carl Guardino, CEO of the Silicon Valley Leadership Group.
He’s one of many opposing the text tax proposal and says there’s already more than enough money in state coffers, despite telecommunications industry revenue decreases the past five years.
“Sometimes we just don’t need a new tax for every idea that a government agency or official has,” said Guardino.
Some tax experts, such as CPA and college tax professor Annette Nellen, say the state tax code is already a confusing labyrinth. Adding a new tax will not make things better.
“If we could look at the system as a whole, what would be the best way to make sure we have a tax code that’s simple, equitable. That we’re not putting a burden on low income as opposed high income. The whole thing should be looked at. Not just, here’s an avenue to get revenue, let’s do it,” said Nellen in her 9th floor office on the San Jose State University campus..
PUC officials say any fee increases for texting would be off-set by lower voice fees. But some consumers say they’re already thinking of ways to circumvent any new taxes aimed at their texting..
“I feel like if they tax it, people would just use other (free) means, like a What’s App, Viber, something, that wouldn’t get taxed,” said Becky Tremann as she texted a friend from Santana Row.
The PUC decided to keep this thorny issue off the agenda at its voting meeting December 13, and will tackle the debate in January. This, as the FCC ruled late Wednesday that texting is an information service and not a telecommunications service.. The ruling could scuttle the PUC’s effort to implement its new tax.