Text Messaging Tax: California Considers Bill to Fund Cell Service for Low-Income Individuals

California is considering implementing a text messaging tax to fund programs that make cell phone service accessible to low-income individuals, The Mercury News reported.

The fee would be a flat rate, rather than a per-text tax, The Hill noted. Opposition groups esTimated that the tax would cost taxpayers $44.5 million each year.

The budget of the California Public Utilities Commission, which issues a surcharge on utilities including landlines, has increased from $670 million in 2011 to $998 million in 2017. However, communications revenues have declined from $16.5 billion to $11.3 billion over the same period, the CPUC said in a report detailing the text message tax proposal.

"Diminishing industry revenue and increasing Public Purpose Program budgets over time has resulted in continuous increase to the surcharge rate. This is unsustainable over time," the report states.

"It's a dumb idea," said Jim Wunderman, president of business advocacy group Bay Area Council. "This is how conversations take place in this day and age, and it's almost like saying there should be a tax on the conversations we have."

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California is considering implementing a text messaging tax to fund programs that make cell phone service accessible to low-income individuals. ROSLAN RAHMAN/AFP/GettyImages

"From a consumer's point of view, surcharges may be a wash, because if more surcharge revenues come from texting services, less would be needed from voice services," CPUC spokeswoman Constance Gordon said. "Generally, those consumers who create greater texting revenues may pay a bit more, whereas consumers using more voice services may pay less."

Opponents have argued that the tax would disadvantage wireless communications companies to tech giants like Facebook, which have their own messaging services.

The CTIA, a trade association representing large companies like T-Mobile, Verizon and AT&T Mobility has argued that texting is not subject to CPUC regulation.

"Subjecting wireless carriers' text messaging traffic to surcharges that cannot be applied to the lion's share of messaging traffic and messaging providers is illogical, anticompetitive, and harmful to consumers," the CTIA wrote in a legal filing.

CPUC will likely vote on the proposal in January, according to The Hill.

A February Pew Research report said that 95 percent of Americans own a cell phone and 77 percent have a smartphone.

Individuals earning below $30,000 each year were 6 percent less likely than people in all other income brackets measured to own a cell phone.

They were significantly less likely to own a smartphone. Sixty-seven percent of individuals making less than $30,000 annually had a smartphone, while 82 percent of those earning between $30,000 and $49,999 had one. Ninety-three percent of people earning $75,000 and up had a smartphone.

Text Messaging Tax: California Considers Bill to Fund Cell Service for Low-Income Individuals | U.S.