by Joseph Weisenthal

Baltimore Thinks It's Exempt From FCC's Opposition To VoIP Taxes

from the what-makes-them-so-special? dept

So far, the FCC has stymied the efforts of various states wanting to tax VoIP, as if it were just a regular phone line. And you'd think that cities would realize that if the states can't get away with it either, then they probably shouldn't try. But all that untaxed business is just too much to give up on without a fight. Now the city of Baltimore is suing Vonage for for failing to collect a $3.50 per month tax that the city levies on landlines and mobile phones. Like most taxes of this sort, there's no real justification for it, except that when it was imposed initially, in 2004, Baltimore had a big budget deficit that needed closing. There are clearly numerous problems with imposing a tax on VoIP, as if it were a discrete voice service, a la mobile phones. And a $3.50 monthly tax is enormous, one that would substantially add to the cost of VoIP service, which often uses price as a major selling point. It's hard to see how the city could argue that the scheme isn't just bald-faced attempt to greedily dip its fingers into others' pots. After all, if it quacks like a duck...

Reader Comments (rss)

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  1. identicon
    uR GF S0x my p33n, Dec 20th, 2006 @ 12:31pm

    I laugh while

    Stupid Baltimore, dicks are for chicks.

    reply to this | link to this | view in thread ]

  2. identicon
    Anonymous Coward, Dec 20th, 2006 @ 12:32pm

    with vonage, you get a telephone number. you use vonage like a telephone. heck, it even uses the existing phone cables (unless you have cable internet, and/or call voip to voip) to complete calls.

    so, if all other phones are taxes, and vonate is a telephone service.....then tehre.

    now this isn't me being for the tax. i think it's stupid. i mean, i pay enough in my phone bill and income taxes, why do i have to have a telephone tax?

    but then again, this is probably some phone company trying to closeout their competition....

    reply to this | link to this | view in thread ]

  3. identicon
    bodhiguy, Dec 20th, 2006 @ 12:41pm

    This is a device tax. Pure and simply. Resolution= do away with the device ! You can't tax packets and without a device VoIP becomes another simple application.

    Want to tax UDP ports 1-53 but untax 67-27960?
    Want to tax my Skype or AIM conversations?

    More specifically, are we just taxing the hand-off from the IP access cloud to the PSTN ? If so, STOP USING PHONE NUMBERS !! IP to IP has an astonishing effect on a lot of things, if you just step back and analyze it for a minute.

    If Vonage would give away their softphone instead of charging for it, this could some some of their problems as well.

    IMHO ;-)

    reply to this | link to this | view in thread ]

  4. identicon
    William, Dec 20th, 2006 @ 12:45pm

    The good old days

    Remember when the government used to control deficits by not spending tons of money. And not inventing new taxes every time they spend too much money. This is just a symptom of a bigger problem.

    reply to this | link to this | view in thread ]

  5. identicon
    Beefcake, Dec 20th, 2006 @ 12:53pm


    I think the difference is that your call using VoIP is transmitted on the internet infrastructure and not telephony. Users of the telephone system are subject to the tax. Users of the internet are not.

    reply to this | link to this | view in thread ]

  6. identicon
    Anonymous Coward, Dec 20th, 2006 @ 12:53pm


    You can't tax packets
    History has shown that almost anything can be taxed.

    reply to this | link to this | view in thread ]

  7. identicon
    bodhiguy, Dec 20th, 2006 @ 12:53pm

    Re: The good old days

    I remember it well Bill. It was known as the Clinton administration :-) Remember that 4 trillion dollar SURPLUS? Well it's gone now and guess where it went--fighting terrorism. All the while the real terrorists sit in their comfortable air conditioned offices and airplanes, misdirecting (triangulation) the attention away form themselves onto others claimed "they" are the real terrorists. While at the same time grotesquely manipulating and misusing the power WE entrusted them with.

    reply to this | link to this | view in thread ]

  8. identicon
    Tees My Body, Dec 20th, 2006 @ 1:00pm

    Haha, nice try Baltimore...

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, Dec 20th, 2006 @ 1:14pm

    just because it's internet infastructure, doesn't mean it's still not telephony. DSL lines are actually telephone lines. dialup is still telephone lines. (remember, diallup is still the largest way to connect to the net) and in order to keep telephone/dsl lines up, you have to have an actual telephone line. therefore you pay the tax. even if you have 2 phonelines on one "physical" line (remember telephone has 2 twisted pairs per cable and only one pair is needed for communication) so you pay 2x the tax. this is no different.

    so yes, vonage must go someplace and be turned from internet packets into "telephone packets"

    ok, so maybe the devices isn't 100% telephony. instead, how about charge 30% of the 3.50 tax because say about 30% of the time it's on "telephoyn" infastructure.

    as i said, i don't like the tax. i don't think it should exist. however i am able to see why some belive the tax to be "applicable" in this case. i wish we had smart people who run the country (this goes for all parties, major and minor those in power, those seeking power)

    now...as chris rock said...out of 30 kid class, 5 smart, 5 dumb and 20 average. the nation is run by b and c students!

    reply to this | link to this | view in thread ]

  10. identicon
    Patrick Mullen, Dec 20th, 2006 @ 1:35pm

    This is a surprise?

    Is it surprising that a city would want to tax VoIP? When it was POTS, the local government received income by taxing POTS, now people are going to VoIP, which takes money away from the local government. It is a surprise that the government wants its income stream back?

    reply to this | link to this | view in thread ]

  11. identicon
    Kuru Oujou, Dec 20th, 2006 @ 1:47pm


    You have been thinking about this, but have only thought about it halfway through. VoIP runs over the internet. Since, as you say, most people are on dial-up, they are already paying the 3.50 tax. As are the people on DSL. So, duing that specific transmission, they will be paying 3.50 PLUS the 30% of that you said.

    And as for your last comment, you have clearly never been here. out of a 30 kid class, 25 dumb, 2 smart and 3 average.

    reply to this | link to this | view in thread ]

  12. identicon
    etrim, Dec 20th, 2006 @ 1:57pm


    you aren't going to find many people using vonage on dial-up since a broadband connection is reqired for the service and to be effective service you need an always on connection.

    reply to this | link to this | view in thread ]

  13. identicon
    Brian, Dec 20th, 2006 @ 2:05pm


    Not that anyone probably cares, but these types of taxes are called franchise fees and they are typically imposed because telecommunications franchises (and other utilities) put their infrastructure in the public right of way. That fee is for use of the right of way, as well as the government's cost to manage it (digging up streets, contract management, etc.).

    This fee model has been in place since probably the 19th century and it is breaking down. But at the same time franchise fees are a critical revenue source for local governments and eliminating them will affect public services like law enforcement and fire protection.

    reply to this | link to this | view in thread ]

  14. identicon
    AJ, Dec 20th, 2006 @ 3:16pm


    If they don't get their money this way it will be another... The could just have a communication tax on all internet traffic, or even taxes on your cell phone for no particular reason, or even a tax when your parents leave you some money when they die.... errrrr.. yeah..... this place is going to shit in a hurry isnt it...

    reply to this | link to this | view in thread ]

  15. identicon
    gman, Dec 20th, 2006 @ 4:06pm

    Well....your half right...

    These taxes can be franchise fees, the corporations see these fees as taxes and can pass them on to customers as "taxes" or "fees" but the real question is when do you pay the franchise fees.

    If I connect to the internet via my cable then the cable company sends me a bill that will invariably have some "government fees" on it. Same from my local telephone provider.

    When I connect to the internet and VOIP with some one I am using my internet connection for an internet service. I have paid my "fees" and I am consuming my goods as the law allows.

    If I hook up a device (mini-computer) that acts as my computer does and allows me to VOIP over the same internet connection there should be no additional "tax" or "fee". I have already paid my fee to be on that network or "government authorized stretch of wires" and should not be taxed again for "use of the ROW".

    This logic also works for the receiver on a telephone network. They have already paid their fees to be on their network and the internet phone service is paying a company who has already paid their fees to connect the call on to the telephone network, which they pass that cost on to me in the form of a monthly subscription.

    What is really happening is that people have left the telephone network and are now handling all their communication over their cable networks. This has probably reduced the franchise fees coming in to the munincipalities or , like many before have mentioned, it is seen as an "untapped revenue source".

    What it boils down to is a tax on a device that I have already paid sales tax on (or not, thanks newegg), with dollars that were taxed as I earned them, sitting in a house that I pay property taxes on, on a network built on public land that I am taxed to use.

    Not that public services aren't needed and taxes pay for those, but c'mon guys.....

    Whether it's a tax on a device or tax on the internet we are basing our budgets on things that could be gone in an instant with one well placed EMP.

    Anyone want to talk about North Korea?

    reply to this | link to this | view in thread ]

  16. identicon
    Anonymous Coward, Dec 20th, 2006 @ 4:59pm

    another thing is the I can ake my device out of state and not lose my phone number becuase it's on the internet. Also I can go out of the country for that matter. What does Baltimore add to this equation that I haven't already been taxed on? Sounds like another tea party is needed.

    reply to this | link to this | view in thread ]

  17. identicon
    Anonymous Coward, Dec 20th, 2006 @ 9:32pm

    It seems to be the role of government to dip their fingers into EVERYONE'S pot. I know, they constantly are dipping into mine. Taxes do seem to be unavoidable. If they don't get you one way, they will simply find another route. Good luck fighting against this beast of burden. Or perhaps you want to join Wes Snipes on the docket?

    reply to this | link to this | view in thread ]

  18. identicon
    bodhiguy, Dec 20th, 2006 @ 9:44pm


    Hey Coward. What about the 21 million americans served by WISPs (no line fees and look ma no lines) and the 7 million+ Americans on satellite broadband ?

    No to be disrespectful in my comments, but wanted to provide a differnt line of thinking about this and hopefully taxation in general.


    reply to this | link to this | view in thread ]

  19. identicon
    Anonymous Coward, Dec 21st, 2006 @ 5:09am

    Kuru...if you would have read my last part i said it was a comment from one of Chris Rock's stand up segments. so tell mr. rock that 2 smart, 3 average and 25 dumb.

    as i mentined before, if you have 2 lines, you pay double tax (each line has it's own fees and whatnot) even though you have one physical wire. well, with voip, you have your "phone" and regular phone. thus double tax is fine (well not really coz taxes suck, but do you see where i'm getting at?) so yeah, you paid your first tax for the line, but you are using hte line a second time, so you gotta pay another tax on that. (because i take a toll rode once, does that mean i don't have to pay ever again?)

    bodhiguy, do you pay a satelite tax? same thing applies as stated above.

    reply to this | link to this | view in thread ]

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