|May 23, 2000 |
The Administration believes that phasing out the Federal excise tax on communications is a worthy policy objective. Although the communications excise tax raises a significant amount of revenue, it is economically inefficient and reduces the progressivity of our tax system. Moreover, the tax is becoming increasingly difficult to administer as technological advances blur the distinction between taxable and nontaxable communications services. However, the Administration believes that this and other important tax policy objectives should be enacted only as part of an overall budget framework for maintaining fiscal discipline, paying down the national debt, extending the solvency of Medicare and Social Security, and maintaining core government functions such as education and fighting crime.
H.R. 3916 would affect receipts; therefore, it is subject to the pay-as-you-go requirements of the Omnibus Budget Reconciliation Act of 1990. The Administration estimates that receipts would be reduced by $1.5 billion in FY 2001 and $20 billion over FY 2000-2005. The absence of any offsets could cause a significant sequester of Federal resources.