STUMP » Articles » Taxing Tuesday: California to Tax Texts? » 18 December 2018, 11:11

Where Stu & MP spout off about everything.

Taxing Tuesday: California to Tax Texts?  

by

18 December 2018, 11:11

Engadget: California considers a texting tax

Cell phone owners in California could soon pay extra for the privilege of sending text messages, thanks to landline-era legislation and changing usage patterns. According to recent public law filings, the state’s Public Utilities Commission (PUC) is considering a plan that would bill users a monthly fee for any text message services they use, and phone service carriers aren’t happy about it.

It all harks back to the so-called landline era of the 90s, when the US federal government and states established Public Purpose Programs (PPP), which charged all phone users a surcharge that supported programs for low earners (the same deal applies to other utilities, such as electricity). As the internet took off, though, the industry managed to get an exemption for what it dubbed “information services,” such as email and web-browsing. On Wednesday, the FCC approved a new rule that clarifies that text messages fall under this term.

But because people use their phones for voice calling a great deal less now, revenues for PPP have fallen by around a third. The budget for subsidizing low earners, however, has risen by almost 50 percent. The PUC reckons that by including texts within the PPP (which would be convenient, as texting shares the same infrastructure as voice calling), it could raise $44.5 million a year.

Here’s a thought: how about getting rid of the subsidies?

Problem solved.

Of course, it’s California, which means that subsidies may never be cut. I think it’s in their state constitution.

The problem, of course, is that loads of people aren’t even using SMS (or whatever) to text. All my texts to Stu are through iMessage, except for extremely infrequent use of my dumbphone I keep for emergency purposes. That’s right, I don’t have a smartphone. I don’t “need” one. I am not interested in people being able to contact me when/whereever. It can wait for almost anything, and for what can’t wait, I have the dumbphone.

WSJ: California’s New Tax on Texting

The texting tax would raise about $45 million a year, though the utilities commission claims it could bring in $220 million if applied retroactively for five years. Yes, you might be taxed on texts you sent in 2014. This is legally dubious, especially since the commission is basing its authority to impose the surcharge on the misconception that texting is a telecommunications service.

Ex post facto taxes?! WTF?!

(Oh, and good luck collecting)

On Wednesday the Federal Communications Commission formally classified text messaging as an information service similar to Facebook Messenger, Skype and Slack. The FCC’s intention is to shield wireless carriers from lawsuits for blocking spam text messages. Yet liberal groups howl that the move will allow carriers to “censor” texts.

This is nonsense since carriers can only restrict bulk messaging. In any case, the FCC vote should pre-empt California’s texting tax. The 1998 Internet Tax Freedom Act prohibits federal, state and local governments from taxing the internet or imposing discriminatory web taxes such as on emails or tweets.

On the bright side, California’s tax on texting should give millennials a lesson in rapacious progressive government.

Pfft, talk about wishful thinking.

Millennials have had multiple examples of stuff like this (such as… oh… Obamacare — where they were expected to pay way too much for health insurance so some older folks could get lower-than-market premium rates). I doubt one more will do anything.

JAPAN FOOD TAX

NHK: Making a meal of the tax hike

People in Japan will need to dig a bit deeper into their pockets when the general consumption tax goes up to 10% in October next year. But not everything will be subject to the hike. To ease the burden on consumers, the government plans to keep the rate on certain food items and drinks at the current 8%. But the new system has businesses and individuals alike asking which ones?

Many countries already have multiple tax rates so the idea may not be new. Still, the new rules are a little tricky.

It’s not that difficult in the U.S. – restaurant meals are often taxed at higher rates than food from the grocery store, even if you’re buying already-roasted chicken in each one. But it does sound like Japan must have had some kind of flat sales tax before this change.

Items NOT subject to the lower rate
The National Tax Agency says an eat-in order at a restaurant will be exempt from the break and charged the full 10%. It says any food or drinks served at a facility with tables and chairs will fall under this category.

Officials appear to have taken a rather broad view of what constitutes a restaurant order. Let’s see how a typical visitor’s day might look after the tax increase.

Prepackaged food at stores
It’s the first morning of your trip. You decide to grab breakfast the way many locals do — onigiri rice balls from a convenience store. Some of the shops have eating spaces making for a quick, cheap bite, right?

Be careful. If you eat in a space like this, it’ll be considered a restaurant order and the consumption tax rate will be 10%. Take the food elsewhere and it drops to 8%.

Whatever. Sounds like the same mish-mash that occurs here in the U.S. That’s what happens when you want to tax sales of goods differentially… just like with tariffs.

Tax confusion
The new rules are causing confusion at the till too. Harue Tsurusaki is a manager at Streamer Coffee Company. Her shop has a dining space, but some items on the menu are available to take away.

Tsurusaki says: “We haven’t figured out yet how to deal with the new rules. First, we’ll have to think about how to handle it on our cash register.”

And there’s potential confusion for customers too. One told her she worries that most staff won’t be able to explain the reason for the tax difference to tourists.

Both locals and visitors have to pay consumption tax, so it’s only fair that tax officials explain the rules clearly, not just to Japanese consumers and businesses, but to everyone who may be paying that little bit extra come next October.

Oh, that reminds me — the tax itself would be increasing from 8% to 10%.

What increase is that?

EXPLAINING TAX INCREASES

If you say 2%:

via GIPHY

Now, saying the rate itself is increasing 2 percentage points is correct, but the tax paid — how much is that increasing?

That’s 10%/8% – 1 = 25% increase in the amount of tax paid on the same priced items.

Very small-looking tax increases can be quite large.

TAX TWEETS

I’m having tech problems, so I’m just doing a handful of tweets.








Related Posts
The Amazon Escape: On Negotiation and Leverage
Taxing Tuesday: Where Are the Highest Taxes?
Theme for the Year: High Tax States Attempting to Avoid Effect of Federal Taxes