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FOR IMMEDIATE RELEASE
March 16, 2000
CONTACT: Michelle Tober
(202) 326-7370

USTA SAYS TELECOM EXCISE TAX IS OUTDATED;
NEEL PRAISES LEGISLATIVE EFFORT TO REPEAL TAX

Washington, D.C. -- The United States Telecom Association (USTA) today announced its support of legislation introduced by Representatives Rob Portman (R-Ohio) and Robert Matsui (D-Calif.) to repeal the three percent federal telecommunications excise tax.

"We fully support the bill introduced today by Representatives Portman and Matsui to repeal the telecommunications excise tax, and we look forward to working with them to pass this important piece of legislation," said Roy Neel, president and CEO of USTA.

USTA's local phone company members collect the tax from customers and pass it on to the federal government. The excise tax revenues -- approximately $5 billion annually -- go into the national treasury, and do not fund telecommunications-specific programs.

"This tax increases the cost of telecommunications services for all customers, whether they have just one phone line or subscribe to a wide range of services including wireless and Internet," Neel said. "A chief goal of the Telecommunications Act of 1996 was to promote the widespread use of advanced telecom services by all consumers. Eliminating this tax, which affects nearly all Americans, would be a good first step towards reaching that goal."

When it was initiated in 1898, the tax was supposed to be a temporary fix to help pay for the Spanish American war, but more than a century later the tax still remains. The tax is highly regressive since low-income Americans pay a higher percentage of their income on telephone service than middle or upper-income Americans. USTA is working aggressively to build support for this bill in Congress. A companion bill is expected to be introduced in the Senate next week.

"Clearly, this tax has outlived its purpose," Neel stated. "The telephone tax is a disincentive to joining the Internet revolution, perpetuating the gap between the 'digital haves' and 'digital have-nots.'"

For more than 100 years, USTA has been representing the interests of the small, mid-size and large companies of the nation's local exchange carrier industry. The association represents more than 1,200 companies worldwide that provide local exchange, long distance, wireless, Internet, and cable services.

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