WASHINTON – Maryland would be among the “biggest losers” if a Federal Communications Commission telephone tax proposal makes it off the drawing board, a consumer advocacy organization charged Thursday.
Marylanders paid about $130 million in 2004 into the Universal Service Fund, a federal program that offers discounted phone and Internet services to low-income and rural consumers, according to the report by the Keep Universal Service Fund Fair Coalition. However, only about $12 million is returned to the state, it said.
The coalition is made up of interest groups including the American Alliance for Retired Americans, the Latino Issues Forum and the Alliance for Public Technology.
Coalition Executive Director Maureen Thompson said the gap would only widen if the FCC turns to a suggested flat tax system to fund its program. She said that, even under the minimum proposed rate of $1 a month per phone line, it would cost Maryland $22 million.
The USF gets its money from phone companies, which then recoup the funding from customers by taxing long-distance calls at about 11 percent of the call on a land line and about 28 percent for cell phones.
Thompson said that, under this system, low-income consumers have more control over the money they pay into the system because they can limit the number of long-distance calls they make. In a flat rate plan, those consumers would pay “the same as Bill Gates.”
Thompson also pointed out that while a dollar a month may not seem like much for most people, it can mean a lot to someone who is on Social Security and has a budget of only $480 per month.
“I want to make clear that the coalition is very supportive of the fund,” Thomson said. “Our real concern is how this affects individual consumers.”
David Fiske, director of the office of media relations for the FCC, said that Chairman Kevin Martin has made the USF “one of his major priorities” but how to make the program the most effective is still in a “fluid stage.”
“We are reviewing how best to manage it and what changes might be needed to make it better,” said Fiske.
A proceeding evaluating the USF is underway, Fiske said, and the FCC could not comment on this report individually.
Because the FCC’s flat tax proposal has not come out yet, the Maryland Public Service Commission could not comment on the issue either, said Bethany Gill, a spokeswoman for the commission.
Andrew Galli, the executive director of the Maryland Consumer Rights Coalition, which is one of the Keep USF Fair Fund Coalition’s members, said that Marylanders already have to contend with problems in other sectors like energy and housing issues.
Sometimes issues like phone bills get overshadowed by the other concerns, he said.
“It does get lost, these pocketbook issues” Galli said.
Galli even organized a group of concerned Marylanders to bring their concerns about the flat tax to the FCC.
“It was important for the chairman to see us there because it put more of a local face on it — that his own neighbors are concerned about this too,” he said.