Copyright 2000 The Washington Post
The Washington
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May 26, 2000, Friday, Final Edition
SECTION: FINANCIAL; Pg. E03
LENGTH: 608 words
HEADLINE:
House Votes to End Federal Phone Tax; Levy Begun in 1898 Would End in 2002
BYLINE: Eric Pianin , Washington Post Staff Writer
BODY:
The House voted overwhelmingly
yesterday to eliminate a 3 percent federal telephone excise tax that was first
imposed 102 years ago to help finance the Spanish-American War.
The tax
was imposed when phones were a luxury for the super-rich, and it stubbornly
remained on the books until this year's budget surplus and a recent groundswell
of support for cheaper access to the Internet.
Yesterday's action, by a
vote of 420 to 2, would phase out the excise tax on telecommunications services
by 1 percentage point a year over the next three years, with the tax fully
repealed by Oct. 1, 2002. An estimated 93 million households and 23 million
business services would benefit from elimination of the tax. More than 252
million telephone lines will be less costly if the measure is enacted.
A
person who spends $ 69 a month on both local and long-distance calls--the
average for residential service, according to one consumer survey--is paying
about $ 25 a year to the Treasury in federal excise tax. If that person also has
a $ 30 monthly wireless bill, the tax comes to about $ 35 a year.
The
measure would cost nearly $ 20 billion in lost revenue over five years, but
proponents say that at a time of budget surplus and prosperity, Congress should
eliminate a tax that has long outlived its purpose and hurts lower-income
families and the elderly.
"The Spanish-American War is over--the
21st-century telecommunications revolution is here," said Rep. Rob Portman
(R-Ohio), chief sponsor of the bill. "It's time to repeal the tax on talking."
The measure awaits action in the Senate. The House is trying to move a
host of different tax cuts in piecemeal fashion, in part to mute Democratic
criticism that the reductions are too costly. Yesterday the Ways and Means
Committee also approved a bill to phase out estate taxes.
The Senate has
yet to act on any of the tax bills; the Clinton administration supports a
phase-out of the telephone tax but favors considering the
measure as part of an overall budget and tax package.
The excise tax
originally was imposed in 1898 on toll telephone service only. After it was
repealed and then reenacted several times, the tax was adopted substantially in
its current form in 1941 and applied to both toll and general local service.
The tax is collected by telephone companies as part of their regular
billing for services. Lawmakers on both sides of the aisle argued yesterday that
in an era of high-speed Internet transmission, the excise tax is outmoded. If
allowed to continue, they say, it would create unnecessary complexity to
commerce and tax rules and transactions.
House Minority Leader Richard
A. Gephardt (D-Mo.) said of the tax: "It doesn't finance any war, but it could
be an impediment in our battle to provide universal access to the Internet."
The only lawmakers to vote against the repeal were Democratic Reps.
Fortney "Pete" Stark (Calif.) and John P. Murtha (Pa.).
The final vote
came after Rep. Lloyd Doggett (D-Tex.) and other Democrats failed in a bid to
attach an amendment requiring certain nonprofit groups that currently can raise
and spend unlimited campaign funds to disclose the source of their funds. The
activities of the Section 527 groups are part of a larger debate in Congress
over campaign finance reform. Doggett's amendment was defeated roughly along
party lines.
"I'm tired of people coming to this Congress and being
hammered into giving money to secret stealth organizations and then having their
cohorts come out and say, 'We'll duck, dodge, twist and turn but just don't make
us do anything about it this year,' " Doggett said.
LANGUAGE: ENGLISH
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May 26, 2000 
