PROVIDENCE – A new Tax Foundation report shows Rhode Island with the seventh-highest combined federal/state/local tax rate in the country on wireless phone service at 21.38 percent.
The highest U.S. wireless combined rate went to Washington state, with 25.58 percent, followed by Nebraska (25.10 percent), New York (24.64 percent), Illinois (24.59 percent) and Pennsylvania (22.32 percent). With increased 911 fees in Illinois planned for 2018, however, that state could soon surpass Washington as most costly for wireless taxes.
Rhode Island was also one of the states found to have a large disparity between its tax on wireless service compared with the sales tax imposed on the purchase of other goods and services, at 2.2 times the tax. The same disparity rate, 2.2 times, was cited for Maryland, South Dakota, Florida and New York. The highest state with this disparity was Alaska, at 8.8 times – Illinois came in right behind Rhode Island at 2.1 times.
Overall, for wireless consumers in the U.S., price competition was high, keeping the average monthly cost of wireless service low, from $44.65 a month to $41.50 a month. Taxes, fees and surcharges, however, continued to remain high.
The report calls for wireless tax reform, noting how these taxes disproportionately impact lower-income consumers.
“Reform of communications taxes in states with excessive tax rates would position those states to attract additional wireless infrastructure investments that generate economic growth through the new jobs and revenue growth they produce while helping provide relief to low-income wireless users,” according to the report.
Susan Shalhoub is a PBN contributor.