In 1898, Congress passed a levy of one cent per telephone call to help raise money for the Spanish-American War. By 1990, the tax had become three percent (3%) of your overall telephone bill.

Now some members of Congress want to end the 3% federal excise tax on phone service which traces its history back to 1898, before the IRS tries to apply it to Internet telephone users, according to News.com and have introduced the Telephone Excise Tax Repeal Act.

This federal excise tax on telephone service is only one of many taxes and surcharges that appear on the average phone bill. All told, many consumers pay over 20% in taxes, government fees, and other surcharges imposed or regulated by federal and state governments. In a few pathological cases, that number can be as high as 50%.

It’s about time, too. There are so many taxes, fees and other surcharges on the average person’s phone bill that most people can’t even figure out what they are for, and when they look at the totals, they quickly realize that their telephone carries a very heavy tax burden. As most of these taxes don’t apply at all to VoIP, the lower costs of VoIP itself, combined with the tax breaks, make it a very compelling alternative to traditional telephone service and traditional telephone taxes.

To follow the bill through Congress, see H.R. 1898 and S.1321. Both bills are currently in committee as of 27 July.