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DOWNEY – This Tuesday, Downey city officials want to lower your taxes. Or do they?
While the city council insists Measure D will lower utility taxes for Downey residents, opponents believe the proposed update to the telecommunications tax will ultimately place a new tax burden on residents instead.
Placed on the ballot by the city council, Measure D would update the city’s existing utility users tax so it can be applied equally to both older telephone technology and newer telecommunication technologies.
The current telephone utility tax applies only to cellphones, local and long-distance calls on landlines, but under Measure D all intrastate, interstate and international communications, regardless of the technology used, will be subject to taxation.
That includes everything from fiber optic lines to Internet services like Skype, and other telecommunication modes. It would not apply to digital downloads such as games, ringtones, and music.
If passed, Measure D would also decrease the telephone utility tax from 5 to 4.8 percent. The electricity and gas utility tax would remain at the current rate of 5 percent.
Despite the tax decrease, City Attorney Yvette Abich Garcia believes the update to the telecommunications tax will offset any loss in revenue.
Proceeds from the proposed tax are subject to an annual audit and would go directly into the city’s general fund, which helps finance services such as police and fire protection, park maintenance, playgrounds and athletic fields, recreation, and senior citizen programs.
However, some residents believe city council members are highlighting the tax cut without addressing the tax expansion.
“They are telling you only a half truth which is deception by purpose,” said Larry Drake, a resident of Downey. “This measure would allow them to start a new tax on all cell phones and all internet type telephone services, including your cable television-based telephone service. Folks, that would be a huge tax increase for Downey citizens on the whole to pay.”
Despite the expansion, Mayor Roger Brossmer maintains the updated telecommunications tax ensures the city will continue to receive vital revenues.
“Most cities have already made this change. During these tight budgetary times, we have to stay up-to-date in order to maintain some of those resources,” said Brossmer. “There are no revenue increases here, actually there’s a slight decrease in revenue, but during these tough times any decrease [to the utility tax] is appreciated by the residents.”
Measure D also reorganizes the administration, collection, and refund procedures for all telephone, electricity, and gas users.
The ordinance must be approved by a majority of voters. If voters reject the measure, the utility users tax with continue in its current form.
Published: November 1, 2012 – Volume 11 – Issue 29