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TelephoneThere are many tumultous issues ahead for "long distance". Not the least of which is that the term "long" won’t mean anything. Hard to believe, but years ago, when the phone rang from Aunt Sally calling from thousands of miles away, the whole house would turn silent. "Quiet", people would say, "I am on long distance". It was something special. Sometimes the quality of the call was not that good, and every minute was precious — and expensive. As you have seen in other stories here on the subject, long distance is very inexpensive when using Internet telephony. Rates are beginning to come down as more and moe alternatives to traditional "long distance" service emerge. One thing that is not going down is the taxes associated with telephone service.
Long distance is expensive, but the real burden comes from the taxes. I am sure that all of my readers can top this example, but I was really taken aback by the Verizon bill I received today for phone service at my weekend place.
Charges for phone service

  • Dial Tone (touchtone) at Residence: $5.68
  • 15 minutes of “local” calls:$.80

Taxes and fees

  • Pennsylvania Relay Surcharge: $.08
  • Public Safety Emergency Telephone Act (9-1-1) Fee: $1.50
  • Federal tax: $.40
  • Regional calls (all less than 100 miles away): $2.79
  • Pennsylvania tax on utilities: $ .96
  • Federal line cost charge: $6.10
  • Local Number Portability Surcharge: $.23
  • Federal Universal Service Fund Surcharge: $.59

The above tabulation shows why governments don’t like Internet telephony. The jury is still out generally speaking, but at least one court so far has ruled that Internet telephony is a “data” service not a telephony service, and therefore not subject to telephony taxes. Meanwhile, purchases of clothing or electronics or books on the Net are not subject to sales tax unless the seller does business in your state. That makes no sense. I really don’t mind paying tax on items I buy, regardless of whether it is at a store, from a catalog via telephone, or on the Net. Sales tax makes sense to me — we need state and local governments to provide services. I can see the connection — even though I would like to see more efficiency at all levels of government. When it comes to taxing telephony services that contain artificial costs, I don’t see the connection.