California Plan To Tax Text Messages May Run Afoul Of Regulators

click to expand

LOS ANGELES (CBSLA) – The Federal Communications Commission (FCC) is attempting to block a plan to charge a tax for every text message sent in California.

The FCC asserts texting is an information service and not a telecommunication service. As such, texts can only be taxed if they're classified as telecommunication services.

This could kill the California Public Utilities Commission's proposed plan, which would subject text messages to the Public Purpose Program (PPP) Surcharge to help fund efforts that ensure cell phone service is available to the poor.

The PPP is a surcharge on utilities such as gas and telephone service which help fund programs for low-income individuals.

The wireless industry and business groups are working to defeat the proposal, according to The Mercury News. A vote is scheduled for January.

It's unclear how the tax would be implemented or what the numbers would look like, but it would likely be a flat surcharge.

In a report released this week, the PUC argues that while its PPP budget has increased from $670 million in 2011 to $998 million in 2017, the total revenue of California's telecommunications industry – which funds the PPP – has declined from $16.5 billion to $11.2 billion. The wireless industry – which makes up about 53 percent of the telecommunications industry's revenue – declined from $10.1 billion to $6.12 billion during that time.

Adding a texting surcharge would help bolster that number.

"From a consumer's point of view, surcharges may be a wash, because if more surcharge revenues come from texting services, less would be needed from voice services," CPUC spokeswoman Constance Gordon wrote in a statement. "Generally, those consumers who create greater texting revenues may pay a bit more, whereas consumers using more voice services may pay less."