Legislative Testimony for LB550: Require voter approval of fees and taxes on wireless services and eliminate the Prepaid Wireless Surcharge Act
Good afternoon, Chairman Friesen and members of the Transportation and Telecommunications Committee, my name is Nicole Fox, and I am here today to testify on behalf of the Platte Institute in support of LB550.
We all know that Nebraska is a high tax state in many regards. With state and local governments continuing to face revenue challenges, taxes on the wireless service industry and its customers has become a means of generating revenue. These taxes are regressive, and excessive taxes on wireless consumers disproportionately impacts poorer families.
Overall, Nebraska is ranked as having the 4th highest taxes, fees and government charges on wireless services in the country (18.84%); and Nebraska ranks second when comparing the disparity between the tax rates imposed on wireless service to the combined state and local sales tax rate in each state (2.64 multiple on 7.13% state-local rate).
This disparity in tax burden on wireless as compared to broad-based consumption taxes imposed on other goods and taxable services subject to sales and use taxes has been a notable argument for reform. Wireless and other telecommunications are one of the few services that are consistently subject to sales and use taxes by states with both narrow and broad sales tax bases.
Local governments in 12 states currently impose some type of tax or fee on wireless service over and above any broad-based local sales tax. In states with the highest wireless taxes, local taxes play a prominent role. Nebraska is one of those states, allowing local business taxes of up to 6.25%. Regionally, only our neighbor Missouri imposes a local tax.
In 2018, Missouri enacted legislation allowing local jurisdictions to charge a wireless 911 fee of up to $1.00 per month per line, if approved by the voters. Prior to passage of this legislation, Missouri was one of only two states in the country that did not impose state or local 911 fees on wireless service.
Some states have their own universal service funds (USF) that provide subsidies for many of the same purposes as the federal USF. In Nebraska, high state USF surcharge rates add significantly to the overall burden on wireless consumers.
LB550 proposes that no municipality shall impose any tax or fee related to wireless and prepaid wireless services unless the imposition of such tax has been subject to a vote of registered voters within the municipality at a primary, general, or special election (Section 1).
LB550 excludes wireless service from being subject to a surcharge of twenty cents (Section 2); lowers the cap of the Enhanced Wireless 911 Surcharge from seventy cents to thirty-five cents and it removes this additional fee on prepaid wireless services by eliminating the Prepaid Wireless Surcharge (Section 4).
At a time when many Nebraskans desire tax relief, LB550 reduces tax burdens to consumers and gives voters a voice when it comes to local taxing authority.
Thank you for the opportunity to testify today.
|State sales tax||5.50%||Access & intrastate|
|Local sales tax||1.63%||Lincoln (1.75%) and Omaha (1.5%)|
|City business and occupation tax||6.13%||Avg. of Omaha (6.25%) & Lincoln (6.0%)|
|State USF||4.37%||6.95% times FCC safe harbor|
|Wireless 911||1.16%||$.45 per month|
|TRS||0.05%||$.02 per month|
|TOTAL TRANSACTION TAX||18.84%|