A landline usually transmits data through a metallic wire or optic fiber telephone line instead of a mobile cellular network, which transmits data using radio waves. Landlines are usually fixed at some points where people operate them from. For instance, they can be fixed in homes, streets, jails, and big institutions. Customers who use landline services have been complaining about the amount of money they are charged. The owners of the landlines are also complaining about the high taxing rates by the government. Governments have imposed high tax rates on landline usage, which is a major barrier to business. Telecommunication companies are regarded as good payers of taxes in most countries. However, heavy taxes are employed on them due to paying off the licenses and the spectrum fee, which usually has its percentage in the GDP. The essay below discusses why landlines are heavily taxed and their impact on the markets.
Every phone service has a federal tax paid for, which is the cause of the alarming rise in the cost of using cell services. Different countries have different rates at which cell phone tax rates are applied (Obermier & Hollman, 2020). The federal tax changed by the government might be used to fund the locals, the state, districts, or emergency services. The listing of the wireless taxes is done at the end of a long cell phone bill. Most consumers do not realize this, which becomes an easy way for the government to collect revenues from landlines (Willys, 2018). The people paying for the landline services cannot know whether they are being taxed or not, and this is the technique the government uses to collect taxes without any notice. No regulations limit how much the taxes can skyrocket so that the taxes can shoot high. No government has passed an act to prevent raising the taxes on landline services. An act will not lower the taxes but will help prevent them from shooting too high.
The entrance of cell phones into financial ecosystems has substantially aided the development of financial inclusion in most nations. Sellers and buyers communicate through phones before they meet up for the actual buying of a commodity (Hay, 2018). High taxes on cell phones raise the cost of communicating with each other. For example, a 10% increase in mobile phone adoption in London increases a country’s yearly economic growth rate by 6%. It is expensive for a seller and a buyer to negotiate a final agreement on a phone call. Much airtime is consumed for such activity due to the government’s high taxes imposed on telecommunication companies (Ndung’u, 2019). For instance, a landline in the United States of America costs forty-two dollars a month. It is very expensive for small-scale traders who need to communicate with their customers for product agreements (Schoechle & Wires, 2018). It may consume most of their profit, thus reducing their working capital. When the tax employed in the phone services is too high, the cost is expected to shoot up, affecting the buyers and sellers.
Phone service taxes should be decreased because people have different living standards. Not all people will afford to buy airtime to communicate with their loves to satisfaction. The government should consider lowering the rate of taxes on cell services to make them convenient and affordable to buyers and sellers. When the sellers and buyers can communicate through phones to a final agreement, this will ensure that the economy is favorable to everyone and that excellent living standards are practiced everywhere.
References
Hay, R. (2018). BIRRR landline and connectivity survey 2018 report. James Cook University. Web.
Ndung’u, N. S. (2019). Taxing mobile phone transactions in Africa: Lessons from Kenya. Web.
Obermier, T., & Hollman, A. K. (2020). Monetary impact of national exchange carrier association tariffs on internet access cost in rural areas. Mountain Plains Journal of Business and Technology, 21(2), 4. Web.
Schoechle, T., & Wires, R. I. (2018). The future of landlines and networks. National Institute for Science, Law & Public Policy, Washington, DC, 69. Web.
Willys, N. (2018). Customer satisfaction, switching costs and customer loyalty: An empirical study on the mobile telecommunication service. American Journal of Industrial and Business Management, 8(04), 1022. Web.