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Vallejo seeks to expand utility tax to cell phones


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  • DAL
    I don't see what the problem is. My cell phone already gets taxed. I assume that includes whatever the charge is for text messaging.

    Leave a comment:

  • SCV-Sop
    started a topic Vallejo seeks to expand utility tax to cell phones

    Vallejo seeks to expand utility tax to cell phones

    I hope many of you know that the same people that over extended their consumer credit, the same people that bought homes with speculative mortgage loans, the same people that extended these loans and ran the largest banking system in the world into the ground:


    Unfortunately there isn’t a solution because financial irresponsibility is engrained in our culture. It’s how we do business in America.



    Vallejo seeks to expand utility tax to cell phones
    Carolyn Jones, Chronicle Staff Writer

    Monday, November 2, 2009

    Taxing text messages? Some Vallejo voters are saying OMG.

    The North Bay city, with its ever-shrinking revenue stream, is asking voters Tuesday to expand its utility tax to include text messages, private phone networks, pagers and voice-over-Internet services.

    It's an idea that's spreading around California, as more than 40 cities have similarly expanded their utility taxes at the ballot box as a way to raise money.

    "We don't use our cell phones a lot, but we think this gives the city a blank check," said retired Mare Island shipyard worker John Kocourek of Vallejo, who's been working against the measure. "We just don't think it's fair."

    Measure U would lower the utility tax from 7.5 percent to 7.3 percent of a resident's total bill, but would widen the services it covers, from gas, electricity, water and traditional land lines to modern telecommunications.

    The tax gets complicated when it comes to things like text messages. Some consumers pay a flat rate, after all, while others pay by the text.

    Vallejo, which filed for bankruptcy in 2008, is desperate for revenue. Its general fund has shriveled from $83 million to $65 million in less than two years. Property taxes continue to free-fall and public-employee salaries and benefits continue to climb.

    "This tax is absolutely critical to maintain some semblance of public safety for our community," Mayor Osby Davis said. "Without it, police and fire will suffer. Right now we are absolutely at the bare bones."

    About half the cities in California have utility taxes, which range from 11 percent in Seal Beach (Orange County) and Culver City (Los Angeles County) to 1 percent in Menlo Park. Vallejo's existing utility tax is 7.5 percent, the highest in Solano County but equal to those in Oakland, Berkeley and San Francisco.

    Because of changes in federal tax law, Vallejo and other cities feared they would lose their utility tax altogether unless it updated the language to include modern technology.

    Most cities lowered the actual tax rate in order to make the change more palatable for voters and, at least initially, not result in a huge change in revenue. Over time, however, as technology evolves, the tax could apply to an increasing number of services.

    Donald Maynor, an Atherton attorney who's worked with 50 California cities on the issue, said the fear of taxation run amok is ungrounded.

    "Most people in Vallejo, unless they have a teenager who texts a lot, will actually see a decrease in their utility tax," Maynor said.

    Taxpayer advocates disagree. The utility tax expansion will amount, over time, to a "massive tax increase," said Jon Coupal, president of the Howard Jarvis Taxpayers' Association.

    "People are going to be shocked," he said. "This will add substantially to most people's tax liability. And these things are almost impossible to defeat because on the ballot it appears as a tax decrease."

    The tax will vary widely depending on the taxpayer's cell phone plan. Opponents say cell phone bills are typically higher than those associated with land lines, leaving consumers with a larger overall payout.

    As more people drop land lines and rely solely on cell phones, the tax burden should be shared equally, Vallejo Councilwoman Joanne Schivley said.

    "The only people who are against this are those who've been given a free ride and don't want to give it up," she said. "The tax should be equitable for everyone."

    E-mail Carolyn Jones at [email protected].

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