Recently, the Tax Foundation released a map showing the combined local, state, and federal cell phone rates. The map showed, not surprisingly, that New York residents pay the third highest cell phone tax rate in the country. Our state and local cell phone tax is 17.85 percent. When those taxes are combined with the federal tax rate, New Yorker’s cell tax rate is 23.67 percent.
Most cell phone customers get a breakdown of costs. Service providers often line-item out these taxes on your bill. In New York, cell phone users are charged $1.20 every month. This surcharge is known as the “New York Public Safety Commission Surcharge.” In addition to this state surcharge, many of state’s 62 counties charge an additional $.30 a month. (Fourteen counties, Bronx, Delaware, Hamilton, Jefferson, Kings, Lewis, New York, Niagara, Oneida, Oswego, Queens, Richmond, Schoharie and St. Lawrence counties, do not charge the additional $.30.) Some of this $1.20 surcharge is earmarked for sensible emergency spending through the Public Service Commission while other dollars are placed, unfortunately, in the state’s general fund.
Here is a cost breakdown with some history. In 1991, the state began charging the New York Public Safety Commission Surcharge which was set at $.70 a month. This $.70 was used to establish the federally-mandated Emergency 911 Centers with the state Public Service Commission. These centers save lives. This was a sensible way to raise revenue to enable our state to implement new technology and connect emergency services so that New York residents would be able to call 911. These call centers dispatch local units and police, ambulance or fire personnel to respond to emergencies.
However, as New York has faced several budgetary challenges since 1991, that surcharge has been increased and not all of it goes to the E911 or emergency responders. As mentioned, the state surcharge is now $1.20. Out of that $1.20 collected, $.50 gets placed in the state’s general fund. That means that New York collected $84 million from cell phone users to put into the general fund. This does not include the 4 percent sales tax. Sales tax paid on an $80 monthly “smart phone” bill is $1.80 or $21.60 a year. New York also imposes gross receipt taxes on wireless companies. That is passed down to the consumer as well.
As can been seen, when government (especially in NYS) gets a tax stream, it is never temporary and inevitably over the years it increases. For illustration, one simply has to look at the tolls on the New York thruway. The number of cell phone users has grown significantly. In 1997, there were 48.7 million cell phones in the United States. In 2012, there were 321.7 million nationwide, according to the Tax Foundation. Because of additional users, revenues from these taxes continues to increase. For government, this revenue is addicting. While establishing a dedicated funding source for projects very often makes sense, too often these taxes are diverted to the general fund and the taxes never seem to go away even after the original project for which the tax was initially established is completed. Our state should use taxes for their dedicated purpose. If that purpose no longer exists, it should give the public back its money.
If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office. My office can be reached by mail at 200 N. Second St., Fulton, New York 13069, by email at [email protected] or by calling 598-5185.
