California may fund low-income connectivity with a flat tax on texting

California maintains lifeline programs for low-income and other marginal communities to be able to use cellular service at an affordable rate. But while the funds required has increased over time, tax revenue from service providers has dropped precipitously.

So, the California Public Utilities Commission is trying to rectify that by proposing a flat tax assessment on all customers who use their network’s SMS or RCS capabilities. This would not affect customers who use chat apps like iMessage and Facebook Messenger. It’s not clear if the fee would be assessed as a requirement to get text service.

The proposal, which comes on top of a 52-page study which you can read at the source link below this story, has come under fire from consumers at large, the CTIA and the FCC, which says that state utility commissions have “no authority to impose surcharges on text messaging.”

Moreover, tax opponents say that not including messages served over third-party applications would leave 3 trillion messages on the table and is unfair to the industry.

The Mercury News reports that San Francisco bay area business groups estimate a total reap of $44.5 million annually if the tax proposal goes through. There’s also a possibility for the tax to be applied retroactively for the last 5 years.

Still, with the Public Purpose Program budget marked at $998 million in 2017 and rising, the fact remains that existing taxes on the carriers have generated $11.3 billion that same year — it’s a magnitude larger than what the program needs, but that figure has declined by more than $5 billion in 6 years.

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About The Author
Jules Wang
Jules Wang is News Editor for Pocketnow and one of the hosts of the Pocketnow Weekly Podcast. He came onto the team in 2014 as an intern editing and producing videos and the podcast while he was studying journalism at Emerson College. He graduated the year after and entered into his current position at Pocketnow, full-time.