Wireless Charges & The Spanish American War

Every time you get a telephone bill, there’s a long list of special taxes that are added on. One tax from that list, a special federal excise tax for long distance calls, will be going away very soon.

The tax originated in 1898 as a luxury tax to help pay for the Spanish American War. At the time, there were fewer than 700,000 telephone owners in the United States. A 3 percent surcharge was added based on the length of the call and the distance of the connection. As phone companies now offer flat rate, unlimited long distance calling plans, where time and distance are irrelevant, the tax was added to the full fee of the calling plan.

In response to many consumer complaints, the federal government has decided to remove the long distance tax. There will, however, still be a tax for local calls.

Taxpayers will be issued a refund on their 2006 federal income tax to be filed in 2007. The Internal Revenue Service and the Treasury Department have not decided how that refund will be calculated.

This move may set precedents to help consumers fight against new taxes imposed on wireless services. Let’s see what the future brings.

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