The state is trying to figure out how to tax prepaid wireless cell phones and calling cards to collect, on average, 50 cents a month from an estimated 100,000 customers in Maine to help pay for emergency 911 service.
The expanded tax is being promoted as a matter of fairness.
People who have regular land line phones or traditional cell phone contracts are charged 50 cents a month as part of their bill to support the enhanced 911 network in the state. That tax or surcharge now adds up to about $9 million annually. But it has been difficult to figure out how to collect money from those who buy prepaid wireless cards and phones – the most popular being TracFones – since they don’t get a monthly bill. Rather they buy their phones and prepaid minutes at retail stores like Wal-Mart or mini-marts.
Albert Gervenack, director of the Emergency Services Communications Bureau, which oversees E-911 in the state, said at a minimum expanding the tax to all cell phone users is “an issue of fairness.”
“Why should all of the people that are paying subsidize those that don’t?” he asked. The expanded tax is expected to bring in $600,000 or more in additional revenue.
Gervenack downplayed the criticism that the expanded tax would hurt the poor the most, saying the phones are sold to a variety of people, including some who buy 12-month pre-paid cards just to have a phone for safety purposes.
The Public Utilities Commission has recommended the tax be collected and the Legislature set up a stakeholders group to figure out how to do it. The group held its first meeting last week and will recommend a method to be approved by the Legislature in 2007.
The E-911 tax started out at 2 cents per line in 1995, went to 20 cents in 1997, 32 cents in 1999 and up to 50 cents in 2002. The pot grew full enough that in fiscal year 2005 the Legislature grabbed just over $1 million out of the fund to help balance the budget.
Gervenack said the explosion in the number of cell phones in Maine – now up to 630,000 compared to 748,000 land lines – has helped keep the tax steady in recent years, while the E-911 service is improved.
The $9 million collected pays for the equipment, mapping and staff training at 48 call centers manned by 750 dispatchers throughout the state. Salaries are paid for by municipalities, and there is a push on to reduce the number of centers to somewhere between 16 to 24.
Gervenack said 593,846 calls were made to E-911 in 2005. The emergency number is supposed to be used by people in need of police, fire or medical services. The system allows a dispatcher to see the caller’s address and direct help to them if they are calling from a regular phone line.
The Federal Communications Commission recently has required cell phone companies to transmit information to E-911 in the form of longitude and latitude, and that means the state has to upgrade its equipment to interpret those signals. Companies providing voice over the Internet service also are required to transmit information to E-911 dispatchers, and the largest company operating in Maine – Vonage – already is voluntarily paying the E-911 tax, Gervenack said.
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