Dear Representative,
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write to express our opposition to the significant fee increase contained in House Bill 1564, the “Public Safety Act of 2019.” This proposal, while well intended, would double the monthly statewide 9-1-1 wireless fee and impose a ten percent tax on all prepaid phone purchases. Wireless consumers in Arkansas are already burdened with taxes and fees that are among the highest in the nation, and we reject the belief that further drastic increases to both prepaid and postpaid service are necessary. As such, we urge you stand with taxpayers and consumers and oppose HB 1564.
While NTU is supportive of reasonable funding for emergency services and public safety, it is also important to be mindful of the financial situations facing many Arkansans. Raising the postpaid wireless tax from $0.65 to $1.30 for each wireless connection would place an especially heavy burden on low-income families. In fact, the nonpartisan Tax Foundation estimates that Arkansas users are already paying more than 15 percent of their monthly bill just to cover state and local taxes and fees, and almost 22 percent when federal rates are included—which is the eighth-highest in the nation. Worse yet, Arkansas users pay a higher percentage of their monthly bill in taxes and fees compared to all neighboring states.
The fee on prepaid wireless is currently $0.65 per retail transaction. HB 1564 changes this fee to 10 percent of the retail price of the prepaid service. For reference, typical prepaid monthly wireless plan today costs $45 per month. Customers currently purchasing $45 in service per month will pay $4.50 per month instead of the current $0.65 rate. National trends show that prepaid service users are more likely to be low-income Americans who cannot afford long-term contracts and other monthly charges. For Arkansans living paycheck to paycheck, any increase in costs could make prepaid wireless plans less accessible in an increasingly connected world, especially in the case of a hike this staggering
Soaking consumers with higher costs is not an efficient way to upgrade and modernize Arksansas’s emergency response capabilities. Instead of hitting more people with fees they don’t want to pay, lawmakers should shift resources in the budget to fund this modernization if it is that much a priority.
The legislature made great strides this session by delivering meaningful tax relief for many taxpayers and small businesses and we are pleased to see lawmakers engaging in further discussions to reform Arkansas’s corporate tax structure. We hope lawmakers will continue on the path of reducing tax burdens for all Arkansas residents, not pushing through tax and fee hikes that will directly harm low and moderate users.
Sincerely,
Thomas Aiello
Policy and Government Affairs Associate