March 16, 2000

Congressman Ken Bentsen (D-Houston) today announced introduction of H.R. 3916, the Phone Tax Repeal Act, which eliminates a three percent federal excise tax on telecommunications services, including telephone service for consumers.

"This legislation eliminates one of our nation's most regressive taxes-- the telephone excise tax," Congressman Bentsen said. "Lifting this fee will bring overdue tax relief, particularly to low-income and working families."

Joining Congressman Bentsen at a press conference today announcing the legislation, which he is co-sponsoring, were Robert Matsui, (D-CA) and Rob Portman (R-OH). "This was supposed to be a ‘temporary' tax," Congressman Bentsen explained. "After 102 years, I think even Washington has to acknowledge that this fee has outlived its usefulness. It is nothing but a cash cow."

A relic from the Spanish American War, the telephone excise tax was originally a "luxury" tax that effected less than 2% of Americans. At the time, this tax amounted to a penny for long-distance calls costing more than 15 cents. In 1990, this "temporary" tax became a permanent 3% tax on telecommunications services.

"Today, with 94% of Americans --99.1 million people-- using phones or Internet connections, this tax is a burden on nearly every American," Congressman Bentsen said. " This tax is highly regressive because low-income Americans pay a higher percentage of their income on telephone service than middle-income or wealthy Americans. Repealing this tax will save consumers more than $5 billion annually."

In addition to tax relief for consumers, Bentsen added that business will also see an immediate reduction in their expenses after elimination of the tax. "At a time when our economic growth is increasingly linked to the information technology and communications revolution, we need to keep access costs at a reasonable level for consumers and businesses alike," Congressman Bentsen said.

This is not the first time Congressman Bentsen, as a member of the Budget Committee, has sought to eliminate this antiquated tax. Last March, Bentsen cosponsored similar legislation, H.R. 1234, to amend the Internal Revenue Code of 1986 to repeal the excise tax on telephone and other communications services. As a longtime advocate of common-sense tax laws, Congressman Bentsen explains that "while excise taxes generally are in place to modify behaviors, such as drinking alcohol or smoking, the ‘tax on talking' discourages people from using the telephone and accessing the Internet. This serves no social utility and is a burden on nearly every American."

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