The House passed legislation late Tuesday that would temporarily bar states and localities from imposing some new taxes on wireless services like smart phones.
The legislation, authored by Reps. Zoe Lofgren, D-Calif., and Trent Franks, R-Ariz., would impose a five-year moratorium on new state or local taxes on wireless services, unless they are already imposed on other goods and services.
The bill's supporters say states and localities are taxing wireless services, which includes service for mobile phones, iPads and other wireless devices, at rates as high as three times the average state sales tax of 7 percent.
"This bill would not affect any existing revenues. In fact, it wouldn't affect the ability [of states] to raise taxes on all goods," Lofgren said Tuesday during the House debate on the bill. "What it would do is keep [states and localities] from singling out wireless services for disproportionate taxation."
State and local officials worry the bill would limit their ability to raise revenues, so in July the House Judiciary Committee amended the bill to allow a state or city to impose a new wireless tax if it is approved by the affected voters.
Despite this, many groups remain opposed, including the National League of Cities and the National Governors Association, according to Rep. Judy Chu, D-Calif., who spoke out against the bill during the House debate.
"States need all the tools at their disposal to balance their budgets and preserve and create jobs and provide essential services," Chu said. "Yet this bill takes away one of those tools to protect the wireless industry at the expense of other" industries.
Sens. Ron Wyden, D-Ore., and Olympia Snowe, R-Maine, have introduced a Senate version of the legislation, but the chamber has yet to act on the measure. The wireless tax legislation is similar to a law Wyden helped author more than a decade ago that would bar states and localities from imposing multiple taxes on Internet access.
"In light of the challenging economy, we hope the U.S. Senate moves swiftly to pass the companion bill," Steve Largent, president and CEO of the wireless industry group CTIA, said in a statement.
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