Tuesday, December 21, 2010

Communications Taxes Going up in 2011

Get ready for new taxes on your mobile services in 2011.

When you buy a Kindle e-book in 2011, a buyer living in New Jersey who purchases a $10 e-book housed on a server in Texas might pay $1.52 in taxes (7 percent sales tax in N.J.; 8.25 percent in Texas). Mobile phone service generally saw tax increases of about two percent a month in 2010, compared to 2009. But 2011 could be far worse.

Some observers say tax hikes could amount to as much as 75 percent in some localities next year, as governments shift more of the communications tax burden to mobile services, where those levies used to primarily be carried by wired services.

On average, 15 percent of a monthly mobile phone service bill is already made up of taxes and fees, compared to 7% for most other goods and services, according to CTIA.

But in 23 states, taxes run even higher, including Washington at 23.64 percent, Nebraska 23.44 percent, Florida 21.31 percent and New York at 21.1 percent.

Municipalities can tack on a tax, as well. Maryland's Montgomery County, for example, raised its telecommunications tax by 75 percent to $3.50 per month for next year. Oregon's Keizer City Council has voted in favor of a similar tax hike of three percent.

Taxes on e-book downloads to an e-reader could add up to 21 percent of the total price, assuming multiple states apply taxes to the same transaction, according to MyWireless.org , a nonprofit consumer advocacy group.

Taxes on cable TV bills are likely to get hiked as well.

 read more here

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