Will California tax text messages?

December 13, 2018

The California Public Utilities Commission (PUC) is proposing a fee on text messages that would fund public telecommunications programs such as subsidized phone rates for low-income residents. [SF Chronicle]

It is likely the fee would be billed as a flat surcharge, rather than a per text rate. It is unclear how much money customers would be asked to pay their wireless carriers for texting services under the PUC proposal.

Initially, the proposal was scheduled for a vote Thursday. But, it is being held for further review until a commission meeting next month.

The wireless industry, which is opposing the proposed text messaging surcharge, has argued the PUC does not have the legal grounds to impose the fee. Jim Wunderman, the president of the Bay Area Council, a business-sponsored advocacy group, said he is unaware of any local, state or federal program that taxes texting.

Currently, California’s public telecommunications programs are faced with rising expenses associated with subsidizing low-income users and declining revenue from taxes on phone calls as people are making fewer voice calls.

A PUC staff report says the Public Purpose Program budget has increased from $670 million in 2011 to $998 million last year. Meanwhile, the telecommunications industry revenue that funds the program decreased from $16.5 billion in 2011 to $11.3 billion in 2017.

The PUC says the budget is not sustainable, and it claims a surcharge on text messages may be a wash for consumers because the commission would need to collect less revenue from voice calls.