By Larry Jones
March 28, 2011

High Point (NC) Council Member Bernita Sims testified on March 15 before the House Subcommittee on Courts, Commercial and Administrative Law. She told members of the panel that local government groups – the National League of Cities, U.S. Conference of Mayors, National Association of Counties, National Association of Telecommunications Officers and Advisors and Government Finance Officers Association – are united in opposition to H.R. 1002, the so called “Wireless Tax Fairness Act of 2011,” which would preempt the ability of local governments to impose any new taxes on cell phone services for the next five years. She explained that, “In today’s difficult economic times, where state aid to local governments has decreased dramatically, local taxing autonomy is crucial in helping to ensure that the needs of local citizens are met.”

Representatives from the wireless industry have been pushing for the enactment of this legislation for the last several years. They argue that local taxes on communications services, including wireless telephone services, are discriminatory in that they are higher than taxes imposed on other industries. Sims called this argument misleading and told members local groups have published a report disputing this claim and offered to provide members a copy.

Instead of promoting tax parity, Sims said the proposal would provide “special treatment and favoritism for wireless phone companies that continue to experience explosive growth and profits.” She pointed out that according to the Cellular Telecommunications and Internet Association, subscription to wireless communications jumped from 97 million in 2000 to 293 million in 2010, which represents a penetration rate of 93 percent and demonstrates the vibrant growth of the industry.

She also explained that enactment of the proposal is unlikely to change the wireless industry’s investment choices but instead serve to “convert into carrier profits those funds that would otherwise have accrued to localities in this economic environment.” Further she said that enactment of the proposal “would force jurisdictions to rely even more heavily on other types of taxes, thereby shifting the tax burden to those in the community less able to tolerate it.”