One less charge will be seen on monthly telephone bills if legislation approved today by the U.S. House of Representatives is OK d by the Senate, U.S. Rep. Bart Gordon said. The Telephone Excise Tax Repeal Act eliminates the 3 percent federal excise tax on telecommunications services over a three-year period. The first tax on telephone service was enacted in 1898 to help pay for the Spanish-American War when telephones were considered a luxury. Only 1,300 households had telephones in 1898.
People rely on the telephone for a variety of purposes, especially senior citizens and the disabled.
The federal tax was first applied to long-distance service. In 1941, however, the tax was extended to general phone service, which roughly 94 percent of U.S. households today have. The excise tax currently applies to all telecommunications services, including standard and wireless telephone services, as well as computer connections.