Hey, Verizon Customers: Your Bill Is Going Up …

And probably everybody else’s cell phone bills will be going up too, if this settlement trend in the lawsuit over cellular phone taxes continues. We have covered this before here on the blog, and, to repeat, I have always thought that it passes the common-sense test for phone taxes to apply to cell phones, too. I hope and pray that municipalities respond to the (likely) upcoming cellular tax windfall by lowering utility tax rates across the board for their citizens, but I might as well ask for cherry pies to be delivered to my house when they pick up the trash each week.

There is a great line in the article quoted by the above-linked Post-Dispatch blog entry that really sums up well the attitude that many people (but not all) in local government, and government in general, hold toward business — as well as demonstrating their fundamental misunderstanding of economics (emphasis added):

"When they put it on the bill it looks like a sales tax and gives people the impression that it’s some sort of tax on them," said Tim Fischesser, executive director of the St. Louis County Municipal League. "And that’s not the case."

He suggested that companies include the utility tax in their overall cost of business "just like their corporate or income taxes or the golden parachutes" they give executives.

Now, I know Tim Fischesser and he is a very nice guy who does a great job running the municipal league. However, that statement is beyond silly. The idea that ANY BUSINESS IN THE WORLD is just going to accept higher taxes and fees, and eat them, is crazy. That is not how the machine operates — and not just because they are more interested in extravagant executive pay and perks than they are in serving customers.

Business costs are figured into the price of services offered to the public, and when government increases those costs, prices go up. Competition (which there is plenty of in the cell phone industry) lowers costs as much as possible, but a government-mandated charge or tax is always going to be passed along to consumers in some form or another.

A final note: Income and corporate taxes are ALSO calculated into the price offered to the public.