VoIP Kills Cities

You can’t argue the fact that VoIP is the worst thing for balancing the federal and state budgets since the dotcom bust. A few years ago, you just couldn’t have imagined how much revenue is being lost on long distance to Vonage, Skype and a host of other companies eager to help consumers reduce their phone bills., But what’s great for consumers is obviously terrible for a government that feeds off the taxes we pay on local and long distance calling. Add to that the fees for the Universal Service Fund and you have a recipe for upset politicians ands federal bean counters that keep coming up a few beans short. An excellent USA Today Article details the potential crisis.

  • Jack
    June 22, 2005 at 12:36 am

    First of all, I think that USA Toady overstates the problem by several degrees of magnitude. This article smells a whole lot like something that had its genesis in one of those public relations firms that work for the baby Bells, that are hired specifically to distort the truth and spread Fear, Uncertainty, and Doubt. They’ve already milked the E-911 issue for all its worth, to the point that everyone’s sick of hearing about it, so this is probably the next strategy.
    So, let’s put this in the proper perspective. Basically, taxes on phone service have traditionally been a way to levy taxes without putting them to a vote of the people. That MIGHT have made some sense when telephone service was still a luxury. But now that nearly everyone has phone service it has become a regressive tax, which has relatively little impact on the wealthy and the commercial sector, but puts a significant bite on the working poor.
    The services that are being supported by taxes on phone service should be included in the general tax revenue scheme – that is to say, they should be supported by property taxes, or local sales taxes, or whatever mechanism is used to support other local services. The voters should be able to decide whether such taxes are necessary, and should they decide that, the tax burden should be apportioned fairly. There is nothing fair about phone taxes – a family with two traditional phone lines (one for the parents and one for the other people in the house, and I have to say it that way because the stupid blog software seems to think that if I use the word that starts with a “t” and ends with an “n” and has a double “ee” in the middle, that is “questionable content”) may pay as much in phone taxes as the factory down the road that only has a couple of incoming phone lines (because their business offices are in another city or state). Even though the factory owners can clearly afford to make a greater contribution to the tax base, when it comes to phone service, unless a family is poor enough to qualify for “lifeline” service (which would only apply to a single line), they get no breaks on the taxes.
    In any case, cities will adapt. When a large factory or other contributor to the local tax base pulls out of town, the town has to make do with less. If residents want the level of service to which they’ve been accustomed, they will vote for higher taxes. If the townspeople choose not to vote for higher taxes, then the town should perhaps take that as a sign that they need to cut spending, not go looking for some new way to tax residents behind their backs.
    P.S. This has to be the worst blog software I have ever encountered. By the time you finally fix everything to its satisfaction so you can leave a comment, you’re ready to throw a brick through the display!

  • Rich Tehrani
    June 22, 2005 at 9:10 am

    Thanks for the response. I agree that many of the services the telecom taxes and fees support should be paid on revenue generated through other means such as property tax. I say this because the telecom market is going through a revolution right now and the people are getting better service at lower rates. This is a very good thing. I don’t think it is fair to tax LECs and impose fees on their service and not do the same for VoIP providers. No one should have to pay fees in such a rapidly evolving market.
    The government needs to realize that they could stifle innovation and adopt a hands-off approach until the market changes slow down – if ever.
    Regarding the blog software, I’ll have my tech team check into it. I am not sure what you mean but sorry for the inconvenience.

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