“It’s time to repeal the federal tax on talking,” said Portman.  “This legislation will give all of us a bottom-line break on our monthly phone bill.”

Portman was joined by Congressman Robert Matsui (D-California) in announcing the new legislation.

Congress first enacted a 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% tax on telecommunications services in 1990.

According to Portman, “It’s hard to believe that a ‘temporary’ tax could last 102 years, but that’s the way Washington does business.  The phone tax has outlived its usefulness, and it’s become a Washington cash cow, plain and simple.  By repealing it, we’ll give all consumers a break.”

Of the 105.4 million households in America, 99.1 million (94%) have telephone service.  The Portman-Matsui telephone tax repeal would provide tax relief to every one of those households.  Additionally, because of the rapid pace of technological change, the difference between traditional telecommunications, the Internet and other technologies is increasingly unclear.  If the federal phone tax remains on the books, it would jeopardize recent efforts to keep the Internet free from taxation.

“At a time when our economic growth is increasingly linked to the information technology and communications revolution, we need to keep access costs as low as possible for consumers and businesses alike,” said Portman.  “By taking the telephone tax off the books now, we’ll make it harder for Washington to impose excessive taxes on this dynamic sector of our economy.”