Texas Groups: Agency Vote Will Force 2 Million of State's "Most Vulnerable" Phone Consumers to Pay Unfair, Higher Taxes

Business Wire, June 24, 2008

TCA, Gray Panthers Criticize CSEC for "Misleading Media" About Impact of Friday Decision; Reconsideration of Action Recommended at July 25th Meeting

AUSTIN, Texas -- Two statewide consumer groups today criticized the Commission on State Emergency Communications (CSEC) for voting to collect a new prepaid cell phone tax hitting two million of the state's most vulnerable consumers.

The CSEC's board met in Austin June 20 and adopted a new service fee to be charged when consumers purchase a prepaid cellular phone. Prepaid cellular phones are phones that do not involve a billing arrangement with the customer, unlike "postpaid" cellular phones sold on a more expensive long-term agreement basis.

In taking the action, the CSEC incorrectly told members of the news media that the decision had no bearing on the two million Texas consumers who previously had not been determined to be subject to the tax on prepaid phones. Prior to the vote, the Texas Consumer Association and the Gray Panthers of Texas had sent a letter outlining their strong objections to this tax increase on low-income Texans.

"In fact, too many Texans already are priced out of having cell phones Owhich could serve as an important link to their ability to get and keep jobs," said Sandra Haverlah, president of Texas Consumer Association. "I am concerned that the CSEC went out of its way to tell the media before the vote that this was nothing new, when, in fact, they have taken steps that almost certainly will raise the cost of prepaid phone service for literally millions of Texas consumers."

"Clearly, it makes no sense to finance a phone-based public safety system by literally pricing phone service beyond the means of those who are expected to pay the tax," noted Haverlah. We are very concerned that the agency took this action in the face of what appears to be a sizable reserve in the fund, which means that our state's most vulnerable consumers are being zapped for no good reason whatsoever."

"We are urging the CSEC to reconsider this anti-consumer action when it meets again on July 25, 2008. As noted by legal counsel during the CSEC board meeting Friday, there is no authorization in Texas law for this tax," stated Haverlah of the Texas Consumer Association. "Because the relevant statute was passed by the Texas Legislature before the advent of prepaid cellular phones, there is no provision in the law which allows the 911 fee to be paid by customers of prepaid phones."

Both the Texas Consumer Association and the Gray Panthers of Texas plan to continue to oppose the new tax on prepaid cell phone users at both the CSEC and at the Texas Legislature when it meets in January 2009.