Communications
Services Tax
Florida’s state communications
services tax rate is among the
highest in the country. |
Why Does it Matter? |
Lowering the CST would help
businesses and consumers,
especially those with lower incomes,
spend less of their hard earned
dollars on additional taxes.
Econometric models have shown
that lowering this regressive tax
will help stimulate additional
investment in Florida’s communications
infrastructure. As prices go
down, spending on communications
services goes up. This increased
spending provides for
greater investment in Florida’s
communications infrastructure.
Investing in Florida’s communications
infrastructure will increase
productivity for businesses that
rely on these kinds of technology.
|
The communications services
tax (CST) is a relatively new
tax that replaced a number
of local and state taxes on telephone
service in October 2001.
Revenue collected from this tax goes primarily into the General Revenue
Fund; although a small portion of the tax does go into Public Education
Capital Outlay (PECO) funds. There is a state CST and a local CST that appears
on all communications services bills. This includes land line telephone
service, wireless or cellular telephone service, cable television service, and
Direct Broadcast Satellite (DBS) service. At 9.17%, Florida’s state CST rate is
among the highest in the country. Combined with the local CST and the 50
cent fee for 911 services, a $50 dollar telephone bill carries a tax of 16.2%.
SB 980 has been filed by Senators Mike Haridopolos (R-Melbourne) and
Dave Aronberg (D-Greenacres) in the Senate and Rep. Ron Reagan (RSarasota)
has filed HB 567 in the House to lower the sales tax component of
the state CST by 1.17%. Lowering it by this amount would bring the state
CST to 8%. It is important to note that the residential land line telephone
customers are exempted from the state sales tax component of the CST, and
therefore, are already taxed at a lower rate than business, cellular, Cable TV
and DBS customers.
This 1.17% rate reduction in the state CST, if passed, would benefit consumers
by $189.3 million per year in lower taxes. Communications services
are already taxed at a rate much higher than other products and services
which are taxed at a rate of 7% versus the state CST rate of 9.17%. The entire
CST rate is as follows:
State CST rate = 9.17% (residential land line phone service is 2.37%)
Local CST = 6.06% (this is the average of all the local rates)
State 911 fee = 1.00% (based on a $50 bill)
TOTAL = 16.23%
Taxes on communications services are regressive because lower income
consumers pay a higher proportion of their income for telecommunications
services than middle and upper income consumers. This is especially true
for wireless service, since lower prices have allowed millions of consumers
to purchase low-cost wireless service. In fact, there are more wireless phones
in Florida now than traditional wire line phones. As of October 31, 2006,
there were 11.5 million wire line telephone lines and 12.8 million wireless
phones in service in Florida. |
