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Letter


An Open Letter to the Louisiana Senate:
Press “End” on Proposal to Raise Taxes!

April 2, 2012

Dear Senator:

On behalf of our organizations’ thousands of members throughout the Pelican state, we write to express our serious concerns with Senate Bill 361. This legislation seeks to increase local 9-1-1 taxes in Orleans Parish with little, if any, justification for the hike.  

As you probably know, many Louisianans are struggling to maintain their budgets as they face high gas and food prices. For taxpayers dealing with these cost-of-living challenges, the last thing they need from policy makers is additional tax burdens. SB 361 would increase 9-1-1 fees by 48 percent for wireless customers, 89 percent for traditional residential landlines, and 69 percent for businesses. These tax increases are large and will hurt nearly all Orleans Parish residents.

In general, telecommunications taxes are already disproportionately high, hidden in the "fine print," and regressive in nature. For example, wireless customers currently pay state sales taxes, local 9-1-1 taxes, as well as supporting the state universal service fund. The result is an effective tax rate far higher than other goods and services. Furthermore, when you add in federal taxes, cell phone customers end up paying nearly triple the ordinary sales tax rate for other products. This amounts to “sin tax” levels of taxation for services that most agree are essential for expanding connectivity and economic growth.

Moreover, as these taxes hit all households regardless of income, the poor suffer much more the effects of these regressive taxes and fees. A 2007 Heartland Institute study found that low-income households paid a tenfold higher percentage of their income to communications taxes compared to those individuals in the top income groups. Furthermore, despite federal efforts to increase transparency, taxes and fees levied on phone bills remain “hidden” as the total impact of the fees are not readily apparent to consumers.

Orleans Parish’s Communications District has not proven a need for the additional $12 million in funds. Consumers rightfully expect that revenues generated from any 9-1-1 tax would be put toward upgrading 9-1-1 dispatch equipment, system modernization, or other emergency related services, but New Orleans is the only parish that does not maintain a separate budget for its 9-1-1 district. The practical effect will be money raised by SB 361 going directly into the City of New Orleans’ general budget coffers, not towards emergency services.

Before casually heaping on additional tax burdens we urge you to prioritize existing spending. Levying punitively-high taxes on wireless service in this difficult economic recovery is the wrong direction for our state.

Sincerely,

LAC

Brent Mead, State Government Affairs Manager
National Taxpayers Union

David Williams, President
Taxpayers Protection Alliance

Kevin Kane, President
Pelican Institute for Public Policy

John Roberts, President
Taxpayers Union of Louisiana