The excise tax was first enacted in 1898 to pay for the Spanish-American War.  In the 102 years since, the tax has been eliminated, reinstated, increased, phased-in and out numerous times, mostly to help pay for subsequent war efforts and to reduce budget deficits.  Since 1990 it has been a permanent tax that goes directly to general revenues.

 “With our current surpluses, it’s time to give something directly back to the American taxpayer,” Hall said.  “This is a regressive tax that hits seniors, rural and poor customers the hardest – but it hits everyone who owns a telephone, a wireless phone, a fax machine or a computer.”  People and businesses with multiple phones often pay the tax several times a month.

 “With all the other charges on our phone bills, this is one that clearly does not make sense any more,” Hall said.  “As our telecommunications industry grows and more Americans take advantage of new means of communications, this tax could become a prohibitive cost for many citizens and small businesses.  I’m pleased that the measure passed with overwhelming support.”

 It is estimated that families earning between $10,000 and $30,000 a year spend between 3 and 4 percent of their incomes on telephone service, while those earning $70,000 or more spend about 1 percent, according to the Bureau of Labor Statistics.  

 The legislation calls for the tax to be phased out by 1 percent each year, until it is eliminated entirely by the end of FY 2002.  Elimination of the tax will save consumers an estimated $24 billion over five years.