“If the President signs this bill, the 102 year-old telephone tax will go back where it belongs – in the history books,” said Portman, “Back in 1898, this tax was originally enacted to fund a war.  Today, this tax is paid by everyone who uses a telephone, makes a call on a cell phone or uses a phone line to access the Internet.  I hope the President will join Congress in declaring the Spanish-American War officially over by signing this tax relief into law.”

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  It repeals a federal telecommunications excise tax that was originally enacted in 1898 as a “temporary luxury tax” to finance the Spanish-American War.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 amazing that, 102 years after President McKinley signed the phone tax into law, America’s Information Age consumers still are paying the bills for the Spanish-American War.  I hope this effort will set an important precedent about how Congress can work together on a bipartisan basis to repeal other outdated and unnecessary taxes in the future.”