Ninth District Congressman Adam Smith announced today that Congress overwhelmingly passed legislation to repeal the federal telephone excise tax. Smith, an original co-sponsor of H.R. 3916, has prioritized repeal of the phone tax this year.

“We should be encouraging growth in telecommunicatons and Internet access, not taxing it,” Smith said. “I’m very pleased that this legislation was passed so overwhelmingly and seems to be on a fast track to becoming law.”

H.R. 3916 would phase out the 3 percent federal excise tax on telephone service (FETT) over three years and be completely eliminated on October 1, 2002. 

“The phone tax was originally put in place to fund the Spanish-American war,” Smith explained. “It was considered a luxury tax because so few people had phones. Obviously, the world has changed and taxing phone lines, which give Americans the opportunity to get on the Internet and take advantage of the technology revolution, just doesn’t make sense.”

Repeal of the FETT would mean a tax cut for almost every American. It would also provide a tax cut for small businesses because many businesses dedicate lines for Internet access, further increasing their tax burden because of the FETT.

“Repealing this tax is a small step forward in the effort to bring technology and the Internet to all Americans,” Smith said. “I look forward to the President signing this tax cut into law as soon as possible.”