Editorials

There's a passing to be marked this week, though not mourned. An outdated tax met its rightful end on Sept. 1. The Telecommunications Infrastructure Fund tax will no longer appear on Texans' telephone bills.

"Eliminating this tax was long overdue," says Peggy Venable, president of Americans for Prosperity-Texas. "It was one of the major accomplishments of the 2007 legislative session. It's a $600 million tax cut for Texans."

Ronald Reagan once said, "There is nothing closer to immortality on the face of this Earth than a government program once started," she points out.

"So this was a real win," she says.

The Texas Legislature created the TIF in 1995. Its purpose was the expansion of broadband services and digital communications to public schools and libraries, particularly in under-served rural areas. It was a 1.25 percent surcharge on all land-line telephones, cell phones and pager contracts. That may not sound like much, but since its inception, the tax has cost Texans $200 million per year, for a total of more than $1.5 billion.

But the tax, sold to lawmakers as a temporary measure, never went away. A few years ago, as the state tried to deal with an estimated $10 billion budgetary shortfall, the revenue was scooped into the general fund for state spending.

State Rep. Joe Strauss, R-San Antonio, authored the bill that eliminated the TIF tax.

"I believe that Texas should continue to promote itself as a high-tech state," he wrote last week. "I also believe that government should not perpetuate taxes or programs that have outlived their purpose."

State Sen. Kevin Eltife agrees.

"I was happy to support the repeal of the TIF tax and we should look at every user fee and tax in this state," he said. "If it's not being used as intended, or isn't serving its purpose, it should be repealed just like the TIF."

An excellent start has been made; the TIF tax is gone and funding meant for state parks has been restored, but there are other opportunities now, such as the Universal Service Fund (USF).

The USF surcharge, which appears on all land-line and cellular telephone bills, is supposed to help phone companies provide phone service in rural and remote areas. But the USF is outdated, unnecessary and expensive, the Texas Public Policy Foundation's Bill Peacock says.

The 4.4 percent surcharge collected $394.9 million in 2007, which was distributed to four telephone companies: AT&T, Verizon, Windstream and Embarq. Cutting that surcharge could save Texans $144 million a year.

"While the USF helps to keep phone service in rural Texas at reasonable levels, deregulation of the market and increasing urbanization of our state have decreased the need for subsidies," Peacock observes.

That and other outdated taxes should be scrutinized when the Legislature convenes in January.

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