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Thursday, May 25, 2000

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House votes to repeal 102-year-old tax intended to fund Spanish-American War

WASHINGTON – Congressman Pete Hoekstra today voted in support of the Phone Tax Repeal Act, which eliminates a 3 percent federal excise tax on telecommunications services, including telephone service for consumers.

The U.S. House of Representatives voted 420-2 to approve the bill, which was introduced by Congressmen Rob Portman, R-Ohio, and Bob Matsui, D-Calif.

  "One thing about Washington is that once a tax is on the books, it’s hard to get rid of it," said Hoekstra, R-Holland. "It’s time to hang up the 102-year-old telephone tax once and for all. Just about every American has a phone, so this tax cut will go to everyone equally across the board."

  Congress first enacted the telephone excise tax in order to help pay for the Spanish-American War in 1898.  At the time, this "temporary" tax amounted to a penny on long-distance phone calls costing more than 15 cents.  Over the years, the federal phone tax has survived efforts to phase it out and scale it back, and Congress made it a permanent 3 percent tax on telecommunications services from taxation.

  "This bill gives Congress an opportunity to repeal an out-of-date tax that was enacted to finance the Spanish-American War," Hoekstra said. "What once was a luxury tax 100 years ago is now a regressive burden on one of the fastest growing sectors of our economy and hits every family in this country with a telephone or an Internet connection.

  "Repealing this tax removes one more restrictive barrier surrounding communications service. This legislation will encourage growth in the advanced communications sectors and give all Americans a break on their phone bills."