MINNEAPOLIS (WCCO) — When our cell phone bill comes each month, many of us just pay it without a second glance. But if you read it closely, you’ll see we’re all paying a bunch of taxes, surcharges and fees.
So where are the extra charges on your cell bill going?
The FCC does require the cell phone companies to describe exactly what you’re being billed. It also allows companies to bill customers for a portion of the cost of providing access.
As an example, in one Verizon account, $7.86 of a $100.46 monthly bill goes towards taxes, fees and surcharges. Of that $7.46, $2.92 goes back to Verizon in the form of surcharges while $5.57 goes toward taxes, governmental surcharges and fees. These charges are spelled out in the deeper pages of a cell phone bill.
According to a study by Washington, D.C.-based Tax Foundation, Minnesota ranks 26th when it comes to cell phone taxes.
“The reason these rates get so high is because there are so many jurisdictions that are allowed to levy taxes on wireless and telecom,” said Scott Drenkard, an author of the study.
On average, he found about 15 percent of a Minnesotan’s cell phone bill goes to taxes. Those taxes include a 6-cent fee to go toward offering phone services to the deaf and hard of hearing. There’s also a 78-cent fee going toward providing 911 services. The state sales tax of 6.8 percent, a county sales tax, city sales tax and transit improvement tax round out the rest.
“It does start to get confusing when they break it all down,” said cell phone owner Nick Hanson.
Then, there are the fees that go to the companies. According to Sprint, these “are rates we choose to collect from you at our discretion to help defray certain costs.”
These fees include a universal service fund charge that helps provide telecom access to school, libraries and rural or low-income areas, regulatory and administrative charges.
According to a study, each of the big four cellphone carriers – Verizon, AT&T, Sprint and T-Mobile – divvy up the charges differently, but all average out to between $2-$4 a phone.
“It seems little enough that no one would notice but if you added it up for a year, it does add up,” said Susan Hanover of Minneapolis.