said by IL Senator Durbin :

Thank you for contacting me about repealing the federal telephone excise
tax. I appreciate hearing from you.

The telephone tax, which was originally imposed to cover short-term
revenue needs, first appeared as a temporary tax to finance the
Spanish-American war. Telephone taxes have been continuously collected
since the Great Depression. The tax is assessed at a rate of three
percent on local and long-distance telephone services.

I have voted to repeal the telephone tax. However, such legislation has
not been passed by the full Senate. A repeal of this tax will ultimately
reduce the telephone bills of Illinoisans and reduce the cost of access to
the Internet. I will be sure to keep your views on this matter in mind in
case Congress debates changes to the tax code this year.

Thank you once again for contacting me. Please feel free to stay in
touch.

Sincerely,

Richard J. Durbin
United States Senator

said by IL Senator Obama :

Thank you for contacting me regarding the excise tax on long-distance
telephone service. You raise some important concerns, and I am glad you
wrote.

This tax, first imposed in 1898 because of the revenue needs of a military
conflict, is levied at a 3 percent rate and is a permanent part of our
revenue structure. For years the tax was set at 10 percent, but the Excise
Tax Reduction Act of 1965 reduce the tax to 3 percent, and provided for its
eventual elimination. However, the revenue requirements of the Vietnam War
prompted Congress to extend the tax. It has remained between 2 percent and
10 percent since that time.

There has been renewed interest in the telephone excise tax during the
current 109th Congress. New marketing practices and technologies have
blurred the line between which telecommunications activities are taxable
and which are not. For instance, in the case of VOIP (voice over internet
protocol) voice transmissions are sent in the form of packets of
information and are indistinguishable from text messages or e-mails which
are tax-exempt. Further, companies now offer "bundles" of service which
can include communication services which are subject to the excise tax and
other services (such as cable television, high speed internet access, and
text messaging) not subject to tax. These factors have caused consumers
and businesses to scrutinize the telephone service excise tax, and have led
to calls to repeal the tax.

Revenue from this excise tax goes directly into our government???s General
Revenues, which is used to fund an expansive range of federal services.
The case that continued imposition of the excise tax on long-distance
telephone service can no longer be justified is strong. However, with the
cost of the ongoing conflict in Iraq and predictions that the Federal price
tag of Hurricane Katrina could be as much as $200 billion, it may, as a
practical matter, be difficult to eliminate current sources of revenue at
this time.

I am not on the Senate Finance Committee which is considering this issue.
However, your views deserve a place in this debate, and I will keep them in
mind as the discussions on this matter continue. If strategies arise that
allow the government to reduce or eliminate the telephone service excise
tax without sacrificing services to those who need them most, I will
certainly keep your letter in mind.

Again, thank you for contacting me. I appreciate your comments, and I hope
you will share your views with me again in the future.

Sincerely,

Barack Obama
United States Senator