Elected representatives in Washington, D.C., are working to make Americans' telephone bills a little bit cheaper. President George W. Bush has pledged to abolish the 3-percent federal excise tax (FET) on telephone and telecommunication bills, and Congress is following through to make that pledge a reality.
The FET was originally imposed in 1898 to help fund the Spanish-American War. At the time, it was considered a luxury tax, since only a handful of private citizens and businesses owned telephones. The tax has been raised as high as 25 percent during the Second World War, and reached a low of 1 percent in the early 1980s.
Repeal of the tax has generated widespread bi-partisan support. In Congress' last session, 420 Representatives and 97 Senators voted for repeal. President Clinton vetoed the bill because he opposed other measures bundled with it, including a cost-of-living increase for members of Congress.
Even if the FET is repealed, businesses in a number of states might actually see their phone bills increase. A number of governors and state legislatures are looking to impose new state excise taxes on phone bills. Minnesota Gov. Jesse Ventura, I, for instance, is pushing for a new 5-percent state excise tax on all retail telephone, telecom, and cable services. The revenue would be used to support high-cost telephone service areas, deployment of advanced telecom services, and special phone services for the handicapped.