The telephone tax charges the same, regardless of income. Therefore, repeal of the phone tax provides an opportunity to help the poor even more businesses and the middle class. It has been estimated that the total tax on telephone service, including federal, state and local levies, is about one half of every phone bill. In light of this, it is ironic that the Legislature felt it necessary to enact Universal Service laws to ensure that the poor had affordable phone service. Eliminating the state phone tax is a step in this direction.
Any tax creates inefficiencies in the economy.
For example, if railroads are taxed, shippers tend to use more trucks, clogging the-highways and wearing them out. Similarly, telephone use is highly price sensitive. If phone taxes go up then phone use goes down. If the phone tax is eliminated, phone use will go up. If in fact the information superhighway is the road to the future, then state policy should be to encourage travel on this highway, not discourage it.