Justice at Last! Nation's Largest Taxpayer Group Hails Treasury Decision to Drop Long-Distance Phone Tax

(Alexandria, VA) -- Hello Washington, reality is calling. That's the message the 350,000-member National Taxpayers Union (NTU) had for policymakers today, as the group's supporters applauded the Treasury Department's move to suspend collection of the telephone excise tax on long-distance calls and begin issuing refunds.

"Americans will be thrilled to learn that the Treasury has finally chosen to wind down the government's unseemly game of dialing for tax dollars," said NTU President John Berthoud. "Now that the federal tax man will be placing fewer calls to long-distance customers, it's time for Congress to cut off other taxes on talking."

NTU has fought a long battle against increases in the federal telephone excise tax, and was one of the leading citizen groups to oppose a provision in the Omnibus Budget Reconciliation Act of 1990 making the 3 percent rate a part of permanent statutory law. "Ironically, thanks to George W. Bush's Administration, the sun is starting to set for a tax that George H.W. Bush's Administration sought to keep glaring down on taxpayers forever," Berthoud noted. More recently the group has pursued repeal of the phone tax through legislation.

Berthoud noted that the Treasury's new policy provides "a perfect opportunity for Congress to re-examine the additional taxes that continue to clog the lines of communication for consumers." For example, lawmakers could act on an NTU-backed proposal issued today from Senate Finance Committee Chair Chuck Grassley (R-IA) that would do away with the existing federal excise on local phone services.

In addition, Congress should consider repealing Universal Service Fund charges, which helped to fund the Clinton Administration's duplicative program to wire schools and libraries for the Internet. Besides the burden that's passed along to consumers, findings presented at last month's annual meeting of the American Educational Research Association suggest that computer and Internet access have had far less of an impact on raising student achievement than once believed.

Berthoud urged the IRS to heed today's announcement that a simplified process for collecting excise tax refunds would be developed for Tax Year 2006 returns. "Americans already have to jump through too many flaming hoops to claim the tax relief they deserve, which is why the telephone tax refund process should be as easy as speed-dial," he said.

"The Treasury has opened a window that will let fresh air into a stale tax environment that has choked taxpayers for most of the past century," Berthoud concluded. "Now Congress must complete this transformation, so taxpayers can breathe a little easier when they get their phone bills in the mail. Telecommunications have long been necessities in our daily lives, and it's past time federal, state, and local governments stopped treating them like luxuries."

NTU is a non-partisan citizen group founded in 1969 to work for lower taxes and smaller government. Note: For more information on NTU's telecom policy work, visit www.ntu.org.