Dec. 13, 2018 – Mary Greeley News – The proposal was filed by California’s Public Utilities Commission (CPUC), a group that regulates public utilities operating in the state. In addition to communications services, such as cell phone carriers, the group is also responsible for regulating energy, water and transportation over rail systems, and passenger cars.
A proposal by California regulators to slap a tax on text messages has triggered a backlash by the state’s business community.
The Bay Area Council and other high-tech and corporate groups are pushing back against a proposal by the California Public Utilities Commission to levy a texting surcharge on the bills of Golden State consumers, saying it could amount to tens of millions a year in new taxes.
According to Mary Greeley News, The proposal hopes to use the tax to help fund access to telecommunications services for lower-income California residents, making up for lost revenue the state used to receive from a tax on voice calls.
The CPUC has defended the proposed tax, which would amount to about 70 cents for every $10 in text messages, arguing it would not increase the amount paid by consumers in the state, but simply shift some of the charges away from voice services and toward texting.
As mobile phone users shifted from making phone calls to using messaging services to communicate, voice call revenue for these state programs has dropped by roughly a third, from $16.5 billion in 2011 to $11.3 billion in 2017, according to filings from the commission.
Jim Wunderman, president and CEO of the Bay Area Council, a California business advocacy group, said he found the details vague.
“I don’t know how clear the CPUC has been with answering these questions,” Wunderman said. “Does the sender pay? Does the receiver pay? What if you move out of state but you keep the California number? What if you drive down to Reno, Nevada and get a phone? Can you avoid the charge then? These are all things that would be really hard to resolve.”
However, the Bay Area Council contends the proposal could cost consumers $44.5 million a year in text-messaging surcharges. The commission’s proposal could be applied retroactively back as far as five years, snowballing at the initial costs to $220 million, the group contends.
A vote on the proposal had been slated for Wednesday, but the CPUC postponed the decision until its Jan. 10 meeting.
What would be taxed?
According to the filing, the CPUC is proposing to tax traditional text messages known as SMS or MMS. Unlike iMessages on iPhones or using the text feature in WhatsApp, the texts the CPUC would tax are ones sent over a mobile phone’s built-in messaging app, (iPhone users will know these as “green bubbles” in the Messages app). The CPUC is also seeking to retroactively tax users for the last five years.
Wait, they want to tax me for something from five years ago?
Yes, under the current filing the tax would be retroactive to five years ago though exact details on what would be charged and how are unclear.
What about iMessage, WhatsApp, Facebook Messenger?
Messaging apps and services like Apple’s iMessage, Facebook’s Messenger or WhatsApp, Google’s Hangouts or apps like Snapchat and Kik would be exempt from the tax under this current proposal. Referred to as “over the top” services, or OTT, these apps use the internet to deliver their messages, which is a separate form of delivery from traditional text messages.
It is unclear if an updated form of text messaging, known as Rich Communication Services (RCS), which isn’t yet widely available would be taxed. This new standard is being designed to replace traditional SMS and MMS texting that phones and carriers currently use. Like WhatsApp, Facebook Messenger and other apps it will rely on the internet to send messages, allowing for additional features such as end-to-end encryption, stickers, “bubbles” to let you know if the other person is typing and read receipts if they’ve read your message. Mary Greeley News.