News

City says yes to phone tax expansion

The city's general fund is in slightly better shape with the passage of measure T on Tuesday, perhaps bucking a trend of no new taxes in this election.

Because it wasn't technically a tax increase, Measure T only required a simple majority to pass. It received support from 69.4 percent of voters, according to results posted Wednesday morning.

The measure applies the city's 3-percent phone tax to calls made over the Internet, and also extends the tax to interstate and international calls. Mountain View's 40-year-old "telephone users tax," as it's called, currently brings in $1.9 million a year. But city officials say it has declined by $50,000 over the last year as Internet phone services become more popular.

The city's general fund will now be in slightly better shape than it was before, as the tax goes to core city services, such as fire, police and the library. Tremutola, a city-hired consulting firm, said the city could see a few hundred thousand dollars in new annual revenue if the measure passed. But city officials were concerned that if it did not pass, phone tax revenue could continue to decline or, worse, face legal challenges as the old phone tax was based on obsolete federal laws.

Only businesses that heavily use broadband phone services may see a significant increase in their utility bill, which was shown to be hundreds of dollars a month in one case. But those who have their own broadband networks, such as Google, would not.

A group of city council members, residents and at least one city official said to be working on his own time organized a campaign to pass the tax, raising $8,500 for mailers with funds from housing developers and city employee unions.

Comments

Posted by Greg David, a resident of Old Mountain View
on Nov 3, 2010 at 2:51 pm

And they still can't tell us how much money it will bring in or how they plan to enforce it...


Posted by castro mom, a resident of Castro City
on Nov 3, 2010 at 4:14 pm

=)


Posted by chas, a resident of Monta Loma
on Nov 3, 2010 at 4:28 pm

I am curious why a tax like this would not be considered a tax on freedom of speech and therefore unconstitutional under the Constitution of the United States....


Posted by Concerned, a resident of Old Mountain View
on Nov 3, 2010 at 5:56 pm

I'm still waiting to see exactly how the city plans to identify and tax *just* the telephony part of our broadband usage. How, precisely, will the city identify Skype video calls? ISPs don't break out this information. What if I have a voice or video chat over instant message with the folks back home? Are these not taxed because I don't have to pick up a physical telephone to make it happen? That would defeat the purpose of "modernizing" the tax, wouldn't it.

From the city's own Measure T fact sheet:
"Any technology that provides telecommunications will be uniformly taxed. Private telecommunication services as well as data transmitted over telecommunication lines will also be uniformly taxed."

When the city gets into the logistics of actually identifying what, specifically, will be taxable under this law -- and discovering that it's almost impossible to identify -- I fear that the outcome will be what we were promised it would not be: a 3% city tax on all Internet usage.


Posted by localmom, a resident of Cuesta Park
on Nov 3, 2010 at 8:17 pm

What is wrong with you people, voting to TAX yourselves rather than ask the dear old City of MV to just get rid of 1/3 of an over-paid "police dispatcher"?? This is a business-UNFRIENDLY tax, particularly to small or individually owned business. LARGE cos. like Google and Microsoft WILL NOT PAY A DIME, as they own their own servers. Only the rest of us wil be hit! It is utterly ridiculous and I can't believe anyone would vote for this. It's obviously a ploy to keep union salaries high in MV. There was no "threat" to the traditional telephone tax. One other thing, this tax will likely rely on self-reported usage as it is NOT POSSIBLE to distinguish between phone calls made over the internet and other broadband usage.


Posted by Hardin, a resident of Cuesta Park
on Nov 4, 2010 at 12:11 am

I don't see much difference in Measure T than updating an existing law to tax horse and buggies to establishing DMV fees for automobiles. If communication of yesteryear was marked by the telephone, than communication in this internet age will be marked by instant messaging, VOIP, internet chat, etc...

Granted, the law is lean on specifics and the details will need to be worked out, but with the rapid changes occuring in our society due to technology, I think its a good sign to see governmental bodies trying to adapt as best they can.


Posted by notQuite, a resident of Blossom Valley
on Nov 4, 2010 at 7:04 am

it is not only 'updating' and existing tax, but expanding it... due to the inability of the city to (in most cases) distinguish between data and voip usage, a more accurate analogy would be the state expanding the gasoline tax to all corn purchases if people starting refining their own ethanol. I'm surprised by the extension to interstate and international calls... does this not violate the commerce clause?


Posted by Hardin, a resident of Cuesta Park
on Nov 4, 2010 at 8:48 am

I see your point in the shotgun approach to taxation, but the Measure is very specific regarding its aim, taxing phone calls made over the Internet. How this will be achieved remains to be seen.

Also, in the case of Measure T, you the consumer aren't growing or generating anything, you are using a service on which other services like VOIP conduct their business.

Taxing VOIP is no different than the nickel and dime taxes we use to see on our phone bills, or still see on our cable bills.


Posted by ann, a resident of another community
on Nov 4, 2010 at 9:12 am

bravo to local mom....well said


Posted by Mike Laursen, a resident of Monta Loma
on Nov 4, 2010 at 10:00 am

Here's some more info on how VOIP would be taxed. From an article on Measure T that was in the Voice way back in July:

"From a taxation standpoint digital voice data is indistinguishable from other digital data being transmitted over communications lines," writes Kevin Woodhouse, the assistant city manager. That means that if your VOIP service is bundled with your Internet service, "the tax will apply to all data being transmitted." But that can be helped if your VOIP and Internet service provider accounts for VOIP data and Internet data separately. Only some service providers have promised to do that, the report adds.


Posted by Mike Laursen, a resident of Monta Loma
on Nov 4, 2010 at 10:10 am

As one of the signers of the argument against this tax expansion, I'm curious: Can folks here say what were the top one or two arguments that convinced you to vote for this tax?

Also, I'm noticing that there's way more discussion of the details of Measure T now that it has been passed than there was before the election. My guess is that it's because people were too busy with living their lives to think about it before the election, but it has now been brought to the forefront of their attention because everyone had to give it some thought on election day? Is my guess correct, or ???


Posted by localmom, a resident of Cuesta Park
on Nov 4, 2010 at 12:27 pm

To Mike L., I put thought into it before election day, and I voted against it. I just couldn't believe all the positive press the Measure was getting and wasn't sure how to comment on that! Should've started a "No on T" campaign...


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