Proposed Change in Federal Phone Tax May Hurt Universities

May 15, 2006

This weekend the Boston Herald reports on a proposed change to federal telephone taxes being considered by the Federal Communications Commission that could lead to a steep tax increase on the housing facilities of the nation’s colleges and universities:

A plan to make federal phone taxes a flat fee for every phone number and computer modem could cost the nation’s colleges an extra $320 million and prompt some to do away with dormitory phones or raise tuition and fees, opponents say.

Under the proposal, the federal Universal Service Fund fee would shift from the current pay-as-you-use percentage of long-distance calls to a flat $1 tax per month on every phone number.

Because of the number of lines colleges and universities have, the plan would pose a particular blow, many say, resulting in a net annual increase of at least $320 million in taxes at the nation’s 4,325 post-secondary institutions.

“The reality is that extra USF costs for colleges and universities would be passed along to students and their families, either in terms of reduced service or higher bills,” said Linda Sherry, co-chairwoman of the Keep USF Fair Coalition, a consortium of 115,000 groups opposed to the proposal.

If the Federal Communications Commission approves the plan, the average college could see its phone bill soar to $82,999 per year from $8,971, an increase of 892 percent, the coalition estimated. (Read the full piece here.)

Of course, the most likely consequence of such a tax increase might be a further acceleration of the trend toward cellular service and away from landlines.

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