Five of the nation’s largest wireless carriers have filed a lawsuit against the state of Kentucky over a wireless phone tax set to go into effect January 1, 2006. The new 1.3% tax on wireless phone revenue was passed last March, and prohibits wireless carriers from disclosing the existence of the tax on customer invoices.

Complaining about what they call a “muzzle provision” in a Kentucky cell-phone service tax, Cingular, Sprint, Verizon, T-Mobile and Nextel Partners filed suit Friday in U.S. District Court in Frankfort.

The five aren’t opposing the 1.3 percent gross revenue tax enacted by the General Assembly this year, but they object to provisions that prohibit the companies from listing the tax as a separate line item on customer bills.

“What we’re opposing is a provision … that we feel pre-empts federal law and denies us the ability to provide information to our customers on a particular issue,” Sprint spokesman Matt Sullivan said yesterday.

Under the Kentucky law, companies must either absorb the cost — in effect, passing it on to customers nationwide — or devise a separate rate plan for Kentucky, the suit contends. . . .

The tax provisions, part of the tax overhaul approved by the Kentucky General Assembly this year, would regulate cell-phone rates, which “is expressly preempted by federal law,” the suit argues.

House Bill 272, which was signed into law March 18, says that cell-phone companies “shall not collect the tax directly from the purchaser or separately state the tax on the bill.”

That provision “conflicts with and frustrates bedrock federal policies that apply to wireless service,” the suit says. The cell-phone companies also allege that the measure deprives them of their right to free speech and that it shifts the cost of the tax from Kentucky customers to customers in other states, violating the U.S. Constitution’s Commerce Clause. — Louisville Courier-Journal

The state had convinced the wireless carriers to delay filing the lawsuit, but it seems they just couldn’t wait any longer.

This is easily the most insane thing I’ve seen a government do in quite a while. Levy a tax, and require that the companies affected keep quiet about it?

Either way, your cell phone bill is likely going up if you live in Kentucky. The question to be resolved is whether subscribers will find out the reason for the increase. The reason, of course, being that the state of Kentucky doesn’t want the consumer to know about it.