from the today's-lesson-in-economics dept
Like a lot of things, the price of telephone service displays "stickiness", a term used by economists to describe something that's resistant to change in a particular direction. Phone bills are "sticky downwards", meaning they rise much more easily than they fall. Verizon and BellSouth illustrated an example of this last fall, when they replaced a no-longer-required USF fee on customer's bills with
various sketchy surcharges that went right into their pockets. After
an uproar, the new charges got rescinded, but the general idea is one that remains in telcos' playbooks. Now, in Texas, Sprint
is passing along a new business tax to customers, adding a 1 percent "Texas margin fee reimbursement" surcharge onto cell phone bills, in order to pay for an increase in state taxes the company must pay. While the state has enacted a 1 percent tax on business' gross receipts, they must only pay it on a maximum of 70 percent of those receipts, lowering the effective tax rate -- and this has attracted the attention of state officials, who are looking into how Sprint's passing the charge along to consumers. Of course, there's nothing preventing companies from charging customers more to pay for the higher taxes, but as
an editorial in the Austin newspaper points out, while the business tax increased, a cut in school property taxes enacted by the legislature also applied to businesses, but Sprint doesn't seem to be passing that decrease along to consumers. And there, dear readers, is stickiness in action.
