California Wants to Tax Your Text Messages. Here's Why
Have you found yourself texting people instead of calling them? Sure. Have you stopped to debate whether texting is a form of “telecommunications” or an “information service?” Chances are the answer is “no”.
California’s Public Utilities Commission (PUC) is betting you haven’t either — and the difference matters because the commission has jurisdiction over telecommunications, which includes telephone calls. What’s more, it wants to extend an existing tax on calls to include text messages, the Mercury News reports.
Should it get its way, then Californians may soon be taxed on every text they send from their cell phones.
Gather round, millennials and Generation Z, to learn about the landline era, when the U.S. federal government and states established so-called Public Purpose Programs. These programs charged all users of telephone services a surcharge that subsidized programs for lower earners. They also apply to other utilities such as electricity and natural gas. During the rise of the Internet, however, the telecoms industry managed to get an exemption for “information services” such as web browsing and email.
As mobile phone users have shifted their usage patterns away from voice calls, voice call revenues for PPP have dropped by about a third, while the budget for subsidizing poorer users has risen by almost half. So California’s PUC is exploring its options and, as texts share infrastructure with voice calls — even if the medium is different — it estimates it could raise $44.5 million a year with the change. Applied retroactively it could amount to a bill of more than $220 million for California consumers.
In response, the telecoms industry is filing complaints arguing that texting is an email-like “information service” and should be exempt from PPP. The FCC is meeting today to address the issue.
Of course, even texting is going out of fashion. Chat apps that route messages over the Internet, such as WhatsApp and iMessage, would be exempt and already represent almost triple the volume of texts, an industry group says.
