Will Feds End Spanish-American War Telephone Tax?

The Bush administration has announced it will support ending a century-old ghost of the Spanish American War known as the federal excise tax on long-distance wireless and landline telephone service. Treasury Secretary John Snow said the White House will support a Senate bill calling for the removal of the unpopular 3 percent tax that was incorporated in 1898 to fund the Spanish American War.

"Today is a good day for the American taxpayers," Snow said. "It marks the beginning of the end of an outdated, antiquated tax."

In 2002, Congress passed a bill to repeal the tax and a number of federal appeals courts have called for its removal as well. However, this is the first time a presidential administration has supported the move. As part of the decision, taxpayers are set to get refunds for tax payments made over the past three years.

Exact details aren't known at this point, but it's likely that refunds will be included in 2006 individual tax returns. Snow estimated the refunds will cost the government $13 billion in 2007 and 2008, a huge amount by any stretch but particularly at a time when federal budget deficits are staggering. Inside sources say the government was relying on receiving more than $42 billion from the tax through 2011.