Tuesday, January 31, 2012

Hidden Fees and Taxes

We've become so accustomed to taxes and fees that they become hidden from view. In one case we just assume the retail price plus sales tax - while it is visible on the check it becomes hidden in the pricing decision.  The other case is when the taxes are embedded in the price (like gasoline).  Fees can be tricky, numerous and material to the overall price.  That is why the recent regulation on Airlines was to publish prices all inclusive of fees.

The worst offenders are the utility companies. Just take a look at your phone bill (wireline or wireless) and count the number of fees and taxes.  And do you know whether these fees and taxes are calculated on the gross receipts or on the net receipts (which would include any promotional discount you are receiving).  Who really audit's the tax and fee calculation?

I just did a quick calculation of the number and amount of taxes and fees I pay on my Cincinnati Bell Telephone bill.  There are no less than ten different line item fees and taxes (911 charge, Federal Access Charge, lifeline recovery surcharge, Relay/TDD Surcharge, Carrier Subscription, Admin Recovery Fee, Two Universal Service Fund Charges, State Tax, Federal Tax).

This added $11 to my $40 phone bill  (22% of my bill). 

So when some asks how much tax do you pay - remember to add in the hidden tax and fees.

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