Phone Tax To Pay For Old War?

By: Whitney Holmes
By: Whitney Holmes

July 11, 2005

There's a small tax on every phone bill you may have never noticed. It dates back to the Spanish-American War. Some people are now calling to repeal this tax.

Every time you pick up the phone, the government is taxing you, something most of us don't realize.

The tax was actually designed to help pay for the Spanish-American War.

"I think that war is long done. They shouldn't need money for that anymore," said consumer Michael Schwartz.

The federal excise tax on phone service is still in place, even though the war ended 107 years ago.

"We're being duped. It's a little suspicious to me," said another consumer.

It was originally a tax on the rich, since phone service was a luxury back in 1898. But consumer advocates say this is a 19th century tax on a 21st Century technology, and it ought to be repealed.

"Consumers are getting over-charged and miss-charged on their phone bills and we think the government should look into this and do something about it," Gene Kimmelman of the Consumers Union.

Lawmakers tried to repeal the tax back in 2000, but President Clinton vetoed the bill.

At three percent, the tax only amounts to pennies per call, but brings in over 6 billion dollars a year. Kimmelman says that's not the point.

"The government hasn't been straight with the American consumer and taxpayer about why this charge appears on the telephone bill and what it's really used for."

There are currently bipartisan bills before both the House and Senate that would disconnect the tax.

Even big phone companies like AT&T and Verizon say its time for the government to cut the cord on the Spanish American War.


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