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VoIP Articles  > VoIP is less Taxing 

VoIP is less Taxing than Traditional Telephone Service.
By: Chris Landry

When it comes to VoIP Broadband Telephone service, there are many benefits.  Unlimited local and long distance calling, included features such as CallerID, Call Waiting, Find Me/Follow Me, etc., and reduced costs.  Many people overlook one thing when they are comparing the price of a VoIP provider and their Traditional Telephone service, and that is “What taxes are associated with VoIP telephone service vs. what taxes are associated with traditional telephone services?”

In my opinion, this is a huge factor in making the decision to go with a VoIP Broadband Telephone solution.  The only VoIP Tax (as of the writing Feb. 2005) associated with a VoIP service is a Federal Excise Tax of only 3% of the bill.  For example, if you signed up for a VoIP unlimited calling plan for only $19.95 per month your monthly total would equal $20.55.  This $20.55 per month would cover all of your calls to the U.S. and Canada, all of the included features, and quality customer service. (Noted exception: Vonage customers located in N.J. are required to pay sales tax on their Vonage VoIP service.)\

Conversely, a Traditional telephone bill includes numerous taxes and surcharges.  For example, I had a discount telephone company that only charged me $9.99 per month for a basic Traditional Telephone service in California. Please look at the breakdown of all of the taxes and charges.

BASIC MONTHY CHARGE     $9.99
CALL WAITING      $3.20
FCC ACCESS CHARGE      $4.49
DIRECTORY LISTING/ NON-PUBLISHED      $0.79
FEDERAL TAX    $0.54
CA RELAT SVC AND COMM DEVICE FUND   $0.04
E911 TAX      $0.09
UNIVERSAL LIFELINE SERVICE CHARGE      $0.16
CA HIGH COST FUND SURCHARGE A $0.02
STATE REGULATORY FEE      $0.01
UNIVERAL SERVICE FUND     $0.39
CA HIGH COST FUND SURCHARGE B $0.30
TOTAL TAXES, FEES AND SURCHARGES       $10.03


So, my bill total was $20.02 for the month and that was before I ever picked up the telephone to make a telephone call.  Also the only feature that I opted for was Call Waiting.

You can draw your own conclusions on whether or not VoIP is right for you. If you don’t make any outgoing calls then you may want to stick to your traditional telephone company.  But from an economical stand point, VoIP is clearly the less expensive option if you make any long distance telephone calls.

Economics is only one part of the equation.  Be sure to read my other article on “Things You Should Consider When Selecting a VoIP Provider” 

For a listing of popular VoIP providers and to do a side by side comparison of VoIP providers and services please visit www.voipchoices.com

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