Just as gasoline costs more at the pump in Pennsylvania than in most other states because of higher state taxes, Pennsylvanians face higher cellphone costs than do residents of most other states, for the same reason.
There is a second similarity in the taxes on fuel and cellphone use, in that the state imposes direct and indirect taxes on consumers. The state assesses a direct gasoline tax and a second oil franchise tax on wholesalers, who pass on that cost so that consumers pay both. Likewise, the state is just one of six that assess a direct tax on cellphone use and a gross receipts tax on service providers, which they pass on to consumers.
According to the nonpartisan Tax Foundation, Pennsylvanians paid the nation’s seventh-highest total cellphone taxes as of 2020 — an average of $304 per year on a $100 monthly bill, compared with the national average of $260. The combined local and state sales taxes and gross receipts tax on the service comes to 16.1%, which is in addition to the federal 9.1% tax, for a total of 25.4%.
According to the Pew Research Center, more than 90% of Pennsylvania adults use cellphones.
Gov. Josh Shapiro proposes eliminating the 6% state sales tax on cellphone service and the 5% gross receipts tax, which would reduce Pennsylvanians’ cellphone taxes by $124 million in the first year.
To address another problem, insufficient funding for county 9-1-1 emergency communications centers, the governor would increase the separate 9-1-1 per-line fee by 38 cents, from $1.65 to $2.03, and then tie the fee to an inflation index. That would produce more than $50 million for 9-1-1 centers in the first year.
According to the House Republican caucus, tying the 9-1-1 fee to the rate of inflation would result in that cost exceeding the current cost of the existing taxes by the end of this decade.
Lawmakers still could achieve the immediate savings for consumers and improvements for 9-1-1 operations by eliminating the current taxes — which hits the Republicans’ general policy sweetspot — while capping the amount that the 9-1-1 fee could rise in a given time period.
State consumers could use a break. Lawmakers should hear them and work with Shapiro to produce one.
— Republican & Herald, Pottsville via TNS
