The bill also includes the Phone Tax Repeal Act, legislation sponsored by Congressman Rob Portman (R-Ohio) to repeal the 3% federal excise tax on telecommunications. 

“I’m glad the tax on talking is one step closer where it belongs -- in the history books,” said Portman, “The Spanish-American War is over, but the tax has lived on for 102 years.  It proves that, once a tax is imposed in Washington, even a ‘temporary tax,’ it’s nearly impossible to get rid of it.”

Portman introduced the Phone Tax Repeal Act with Rep. Robert Matsui (D-California).  It repeals a federal telecommunications excise tax that was originally enacted in 1898 as a “temporary luxury tax” to finance the Spanish-American War.  When it was enacted as part of the Spanish War Act of 1898, 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.  The federal phone tax is regressive, affecting lower-income Americans and people on a fixed income (such as senior citizens) more than other taxpayers.

The Portman-Matsui telephone tax repeal would provide tax relief to 99.1 million American households that have a telephone line.  Additionally, because of the rapid pace of technological change, the difference between traditional telecommunications, the Internet and other technologies is increasingly unclear.  For example, 96% of households with Internet access use telephone lines to go online.  If the federal phone tax remains on the books, it would jeopardize recent efforts to keep the Internet tax-free.

Portman said,  “It’s been 102 years since President McKinley signed the ‘temporary’ phone tax into law to help pay the costs of the Spanish-American War.  I hope the President will declare the Spanish-American War officially over by signing this repeal into law.”