- The Washington Times - Friday, May 26, 2000

The House Thursday voted overwhelmingly to repeal a 102-year-old telephone tax that was first imposed to help fund the Spanish-American War. An estimated 116 million household and business phone customers now face a flat 3 percent fee.

The Spanish-American War lasted just four months but, for American taxpayers, "turned out to be the most expensive in history", said Rep. Roy Blunt, Missouri Republican.

"The government collected $5 billion last year to pay for a war fought in the 19th century," Mr. Blunt said.

The tax, called a "relic" by the bill's supporters, will be phased out over three years, taking full effect in 2002. The action was approved 420-2.

The White House supports the repeal, calling the tax economically inefficient, regressive and difficult to implement in the changing world of telecommunications.

But Clinton administration officials say the measure, which would cost the government $20 billion over five years, should be part of an overall budget agreement, not taken up piecemeal.

When it was first imposed in 1898, the tax "went after a luxury item called the telephone, which very few people had," said Rep. Rob Portman, Ohio Republican and one of the bill's chief sponsors. "Well, this is no longer a luxury item."

The tax, which applied initially only to long-distance calls, was repealed in 1902 but was revived to help fund World War I. It was again repealed in 1924, then brought back in 1941 as a tax on all phone service.

Mr. Portman noted that the tax was increased to 10 percent during the Vietnam War, prompting some people to "burn their phone bills along with those burning their draft cards."

The Republican leadership said the tax repeal is just one part of a continuing plan that also will include abolishing the estate and gift tax and increasing the annual limit on tax-deferred contributions to individual retirement accounts.

Republicans in January announced the plan to keep a steady stream of incremental tax cuts on the House floor, rather than passing a single, omnibus tax-cut plan to better show Americans what they are proposing.

Democrats say that their counterparts' approach is not keeping the public apprised, but instead is sneaking the original $792 billion plan through Congress incrementally and thus obscuring its impact on the budget.

The repeal of the phone tax was opposed in the House by a group of Democrats who drafted an amendment to the bill that would drop the tax to 1 percent within 30 days and funnel the estimated $1.5 billion to help pay for Internet access in rural and low-income areas until the tax is eliminated until 2002.

To celebrate the bill's imminent passage, a group of interns dressed as turn-of-the-century "Rough Riders" gathered on the Capitol lawn around a stage festooned with red, white and blue banners.

Rep. Dick Armey, Texas Republican, stood at a lectern that offered both a cellular phone and an old-fashioned table dial phone and announced that the Spanish-American War was over.

With the removal of the aged tax, only one federal levy on phone customers remains a 1 percent tax started in 1934 that now helps finance Internet access in public schools and libraries.

Combined federal, state and local taxes amount to more than 18 percent of a phone customer's bill.

The bill next moves to the Senate, where Sen. John B. Breaux, Louisiana Democrat, and other sponsors said they were encouraged by the strong House vote.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide