Skip to content “Rise in prepaid cell phone use costing 9-1-1”

March 20, 2011

Interesting tax revelations in the story, but I’m much more elated by the prepaid popularity admissions. 🙂

Thanks to Doug Karnuth for forwarding this story.  Red highlights are mine.

Rise in prepaid cell phone use costing 9-1-1
By Tim Gordon KATU News and Staff
Story Published: Mar 9, 2011 at 10:37 PM PDT | Story Updated: Mar 9, 2011 at 10:37 PM PDT

PORTLAND, Ore. – Prepaid cell phone users are costing the Oregon emergency dispatch system millions a dollars a year because they don’t have to pay a tax. But now the state is looking to change that.

Prepaid cell phones are great for people on a budget, and they don’t require a contract. But their growing popularity is cutting into the funding of metro area 9-1-1 dispatch centers because users don’t pay the 75-cent a month tax.

“For us we estimate about a million dollars, and so that is pretty significant,” said Laura Wolfe with the Bureau of Emergency Communications. “If we don’t collect that tax, we collect it from our user agencies.”

So far prepaid cell phones make up about 20 percent of the market, she said.

In the metro area, 9-1-1 handles about 3,000 calls a day and about a fifth of them come from prepaid cell phones.

Darlane Bob, a prepaid cell phone user, said prepaid cell phones are great for her because she doesn’t use the phone that much. If she was on a contract it would cost her more, she said.

She didn’t know she wasn’t helping pay for 9-1-1 services and said she wouldn’t mind paying the tax.

“It is handy if you do need it or if someone else needs it; I mean, why not,” she said.

Almost all wireless providers offer prepaid services. The trick is figuring out how to bill the telephone tax to those customers who don’t get a monthly bill.

With it being a $6 million a year loss in Oregon, some legislators are looking to close the loophole.

“There’s no disagreement the tax needs to be collected,” said Wolfe. “I think the issue right now is how it’s collected and how it’s going to be remitted.”

People using prepaid cell phones aren’t the only ones not paying the telephone tax. People using voice-over Internet services are also immune right now.

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