Bill seeks to curb cell phone taxes

Troubled by what they deemed a "hefty" load of state and local taxes on cell phone bills, four Republican senators have once again called for a temporary ban on certain new fees.

The Cell Phone Tax Moratorium Act would bar state and local governments from imposing any "new discriminatory tax" that applies to mobile services, providers or property for a period of three years, according to bill text obtained by CNET News.com. That means governments would be allowed to levy new fees only if they applied them to more than just the wireless industry.

According to the wireless industry, 14 percent of the average monthly cell phone bill is currently composed of state and local taxes and fees. The average sales tax rate, by contrast, is about 6 percent.

"Excessive taxes dampen innovation, and are regressive, hitting the most vulnerable customers the hardest," Sen. John McCain, who introduced the measure on the first day of the 110th Congress, said in a statement.

Similar language proposed by McCain passed by a 21-1 vote last year as an amendment to a massive communications bill, but that measure died before reaching a full floor vote. This time, the Arizona Republican, widely expected to seek the presidency in 2008, co-sponsored the bill with fellow party members Jim DeMint of South Carolina, John Sununu of New Hampshire, and Gordon Smith of Oregon.

CTIA-The Wireless Association president and CEO Steve Largent applauded the effort, calling the current level of taxation "indefensible" for any product, "let alone one that allows more than 225 million Americans to constantly stay connected and in-touch with the world around them."

The bill is one of a flurry of tax-related offerings that died in the last session but were revived on Congress's first day back in session. With Oregon Democrat Ron Wyden, McCain and Sununu also co-sponsored legislation that would make permanent a ban on Internet access taxes. Two separate but nearly identical proposals--one sponsored by a Democrat, the other by a Republican--are attempting to knock out the remaining federal excise tax on local telephone service.