Excise tax being added to phone bills
The new bills being issued by Hawaiian Telcom now have a line item for the state general excise tax. I thought public utility service companies are exempt from the GET. What has occurred?
Q: Besides the big mess with Hawaiian Telcom's billing, my real problem is that they have increased my bill by adding 58 cents for the general excise tax. How can they do this?
Q: I got my phone bill from Hawaiian Telcom and saw that it had gone up: 27 cents now added for the general excise tax, $1.50 more for "inside wire service maintenance," and four cents for the Federal Universal Service Fee. I was told that the company had to pay the GET because "we're a Hawaii company now." I asked why I didn't get any notice and was told they didn't have to. Why not?
Answer: Hawaiian Telcom did give notice of the addition of "various federal and Hawaii taxes and surcharges," said spokeswoman Ann Nishida.
They were noted in the April and May bills, "in accordance with applicable laws and tariffs," she said.
Telecommunications services in Hawaii are subject either to the general excise tax or public service company tax.
The latter is built into the rates for regulated intrastate (within Hawaii) services, Nishida explained, while the general excise tax, which is listed as a line item, applies to unregulated and interstate (outside Hawaii) services.
"Hawaiian Telcom consulted local tax experts to determine the appropriate application of the GET and made some changes based on that expert advice," she said.
Verizon, which Hawaiian Telcom bought out, did assess the GET on certain products and services, but not on others, Nishida said. Verizon may have been required to pay the tax, but didn't pass it on, she acknowledged, while Hawaiian Telcom has decided to do so.
According to the state Department of Taxation, the general excise tax is not a sales tax. It "is levied on the seller, but is commonly passed on to the customer."
Nishida also said only "a relatively few" of "several thousand products" are being assessed the GET. The assessment for voice mail and high-speed Internet service is what most affects most customers, she said.
The Public Utilities Commission has received "some" calls regarding the assessment of the GET, said Lisa Kikuta, chief researcher for the commission.
The assessment of the tax in this instance did not require the commission's prior approval, she said.
"But if it's applied on local services that fall under the commission's jurisdiction, then (Hawaiian Telcom) would have to file it in a tariff filing with us," Kikuta said.
Regarding the increase in fees, Nishida said the "inside wire maintenance" fee was increased by $1.50 in April and affected customers were notified in April. The Federal Universal Service Fee is adjusted quarterly and increased from 10.2 percent to 10.9 percent in April.
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