Washington continues to top a list its residents probably don’t brag about, the list for taxes collected on cell phone service.
A new study by the Tax Foundation keeps Washington at No. 1, a spot it has occupied since 2014, when it overtook Nebraska in the race to put taxes on wireless service. To add insult to injury, neighboring states of Idaho and Oregon are Nos. 48 and 50, respectively, on the list.
Spokane residents don’t pay quite as much as their counterparts in Seattle and Olympia, the two cities researchers averaged to come up with that top of the heap 18.8 percent for taxes, fees and surcharges on those bills that most of us can’t decipher. Those cities charge a business and occupation tax. Spokane doesn’t, so the local rate is closer to 18 percent.
That’s still higher than 47 other states in the study. And those charges are on top of the federal fees and taxes everyone pays.
Cell phone taxes and fees are creeping up around the country, said Joe Henchman, vice president for state projects at the foundation and one of the authors of the study. This comes as competition among the carriers has driven the cost of service down in many areas.
“Historically, cell phone service was viewed as a luxury,” he said. For many people who have dropped their land lines, however, it has become their prime or only source of phone service. For government officials looking for revenue, taxes on the service has the advantage of being “fairly opaque,” he said.
“Many people direct-pay their bill or if they look at the sheet they don’t spend a lot of time scrutinizing it,” Henchman said.
All cell phone users in the country pay fees and taxes of 6.64 percent, the foundation says. That includes a “universal service fee”, plus administrative fees and “regulatory cost recovery” charges. In Spokane, the city also adds on a utility users surcharge of 6 percent.
Then there’s county and state fees for 911 service – 70 cents and 25 cents – plus local and state sales taxes on the basic cell plan.
One reason Oregon’s cell taxes are so low is it has no sales tax, Henchman said. Idaho has a lower sales tax and no B&O tax. But taxes are based on the address where the bill is sent, so don’t expect a break by keeping a phone with 208 area code when moving from Idaho to Washington.
The Tax Foundation has studied cell phone taxes for about five years, and has talked to legislators as the rates have climbed across the country. They don’t report any significant complaints from constituents.
“They tell us this isn’t something people call about,” he said.
Maybe legislators should change their cell phone ring to cha-ching.