Why am I paying 2.99 for my iCloud storage if my iPhone storage still says full

It is not possible to buy more storage for an iPhone; it will never have more than it did when you bought it. What you bought is iCloud storage that is used for backing up and also for syncing to other devices. Here is an explanation→What's the difference between device storage and iCloud storage? - Apple Support

iCloud+ has 2 independent functions. iCloud backups, and iCloud sync. It’s confusing because they both have the same name prefix. But they have no connection with each other. Go to Settings/[your name]/iCloud. You will see a bunch of switches (with iOS 16 also tap Show All). When you turn on a switch that data type will sync to iCloud. If you do this on multiple devices that share an Apple ID the selected data will sync to all of those devices. 

You can also turn on iCloud Backups. This will back up your phone every night if the phone is plugged in, connected to Wi-Fi and locked.

But note that anything that you sync by the first method will be excluded from the iCloud backups.

If you don’t need iCloud storage you can reduce or cancel it→Downgrade your iCloud storage - Apple Support

You can try asking for a refund, but that isn’t guarantee→Request a refund for apps or content that you bought from Apple - Apple Support, but cancel the storage first.

We cannot refund anything as you are not speaking with anyone from Apple on this user to user only forum, which no one from Apple actively participates.

If you want a refund, you first need to cancel the iCloud Storage plan you purchased --> If you want to cancel a subscription from Apple - Apple Support

You can certainly ask for a refund, which Apple is not obligated to give. It's not Apple's fault you didn't know what you were purchasing. To ask for a refund, this link will help you --> Request a refund for apps or content that you bought from Apple - Apple Support

Please read the link in blue above your name on this page. the only way you can gain more space on your phone is to delete photos, apps, etc. Be sure to save important photos and data to your computer or an external disc.

Also check this link...

Request a refund for apps or content that you bought from Apple - Apple Support

You are paying for iCloud storage, which is separate from the local iPhone storage that you can check in the General settings.

You must navigate to Settings > Your Name > iCloud to check your iCloud storage.

You can select the types of data you want to sync with iCloud, but the space used by apps and local files will only be visible in your general storage.

If you haven't already, you might want to try offloading some apps or syncing your photos with iCloud.

Refer to the following article for more information.

What's the difference between device storage and iCloud storage? - Apple Support

Why I’m paying $2.99 for my iCloud I need you to refund it to me or I’m switching to other