Thursday, August 15, 2013


Obama wants to tack on $5-a-year phone tax to fund high-speed Internet in schools - critics blast 'end run' of Congress and 'endless expansion of program at the expense of rate payers'

  • Last Updated: 7:17 AM, August 15, 2013
  • Posted: 1:37 AM, August 15, 2013
WASHINGTON — That’s one way to “cell” a fee hike. Here's the history of the excise taxes on telephony (click here).
The federal telephone excise tax is a statutory federal excise tax imposed under the Internal Revenue Code in the United States under 26 U.S.C. § 4251 on amounts paid for certain "communications services." The tax was to be imposed on the person paying for the communications services (such as a customer of a telephone company) but, under 26 U.S.C. § 4291, is collected from the customer by the "person receiving any payment for facilities or services" on which the tax is imposed (i.e., is collected by the telephone company, which files a quarterly Form 720 excise return and forwards the tax to the Internal Revenue Service).
Unwilling to ask Congress for extra funds to pay for high-speed Internet connections in schools, President Obama is instead looking to tack yet another charge on cellphones through the Federal Communications Commission.
The new program, called ConnectED, would expand an existing school-wiring effort and cost each cellphone user about $5 a year, said White House officials.
In New York City, the ubiquitous mobile devices already carry 10 separate city, state and federal fees and charges — and that doesn’t include sales taxes.
Obama is relying on the fee hike to avoid dealing with a Congress that White House deputy press secretary Josh Earnest yesterday described as “dysfunctional.”
“You would think that connecting schools to the information superhighway would be a pretty noncontroversial topic,” Earnest told reporters in Martha’s Vineyard, where the first family is on vacation.
“Unfortunately, we haven’t seen a lot of action in Congress, so the president has advocated an administrative, unilateral action to get this done.”
Administration officials said the added fee would sunset after three years after generating about $6 billion.
But critics worry it would continue forever.
According to an FCC survey, half the nation’s schools reported slower Internet connections than the average home.
Pressed on the program yesterday, Earnest denied the program was an “end run” around Congress.
“This is a program that’s already in place. They just need to make a decision about whether or not they want to update this program so they can wire schools to the Internet. The president thinks that’s a no-brainer,” he said.
Rep. Fred Upton (R-Mich.), who chairs the House Energy and Commerce Committee, and Rep. Greg Walden (R-Ore.) slammed the “endless expansion of the program at the expense of rate payers.”
The initial White House fact sheet on the program didn’t mention anything about a fee hike, although the Washington Post reported on it.
The fact sheet stated that the program will connect 99 percent of American schools to the “digital age” and that the president “is calling on the FCC to modernize and leverage the existing E-rate program.”
The independent FCC currently has only three members, two of whom were appointed by Democrats.