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Tuesday, October 14, 2008

Telephone tax increase (Question F) will hurt both the people least able to pay and small, local businesses

(Posted 14 Oct 2008)

Proposed telecom tax increase raises ire in Prince George's; Businesses rally against higher levy on phone service.
Gazette, 9 Oct 2008 (Robbins).
Already pressed by recent state tax hikes and the stagnating economy, Prince George's business owners dread the impact of the county's proposed $17 million telecommunications tax increase, which voters will consider in next month's election.

Proposed by County Executive Jack B. Johnson (D), the measure would raise taxes on phone calls from 8 percent to 11 percent, adding $25 per year to the average phone bill for both residents and businesses. The additional $17 million it's expected to raise would be earmarked for the county school system.

Over Johnson's objections, the County Council voted to put the matter to voters.

Many business owners call the proposed tax increase — Question F on the ballot — regressive, saying that those least able to pay will be hurt the most. The tax is applied to every conventional, wireless and digital cable voice service in the county.

"There‘s no reason for increasing taxes," said Bob Mignon of Minutemen Press in Beltsville. "If you keep increasing expenses, business will have no revenue to invest in equipment, marketing or personnel."

Vera Jones, CEO of One Source Communications in Clinton, said her company, as a telecommunications provider, is not happy about the proposed increase, saying it will cut into the company's revenues.

"The people I'm talking to are very concerned because of the taxes they are paying already," said Arthur Turner Jr., president of a market consulting group in Kettering and chairman of the Prince George's Chamber of Commerce's Quality of Life Committee.

Turner also expressed the skepticism of some in the business community that the added revenues would actually go toward the school system.

"They made the same promise for the lottery. … It's used as a way of selling taxes," he said, saying he wants to see a law guaranteeing where the money goes.

The chamber is against the proposed tax increase and is working to educate the business community on its impact, said James A. Dula, president and CEO of the chamber, which has 900-plus members, according to its Web site.

"During this time of economic downturn and recession, we don't believe it's the best move for the business community," Dula said, emphasizing how vital cell phone use is to many county companies. "This could make us the most taxed county in the state of Maryland. It's becoming increasingly difficult for small businesses to continue operating."

With the increase, the combination of county and other telecommunication taxes would reach 18 percent.

Dula worries that if voters are unaware of the proposal and its impact, they may be inclined to approve it, as they usually want to be done with ballot questions quickly. Over the next few weeks, the chamber will inform all new businesses about the proposal, use its publications to spread the word, and rally opposition through business associations, he said.

Franklin Akinkoye of the African Business Owners' Forum in Upper Marlboro said his group also will be encouraging people to kill the proposal.

"Even a 1 percent tax increase right now will hurt business badly," Akinkoye said.

But Angela R. Killebrew, owner of Academics & Arts, an educational and enrichment service in Largo, argues that the proposed increase is not that significant.

Saying she's a product of the Prince George's school system, Killebrew said she supports any measure that could benefit the schools.

"Our society is technology-driven, but this is a small incremental increase," she said. "I don't think it will have a negative impact."

CTIA – the Wireless Association, which represents AT&T, Sprint Nextel, T-Mobile USA, Verizon and Verizon Wireless – disagrees.

"We are at a time when wireless communication is proving to be extremely valuable to people from all walks of life," said John Walls, a CTIA spokesman. "There are numerous examples of tremendous productivity and efficiency gains achieved through wireless communications."

Walls said county governments should be encouraging this technology, describing it as an economic driver, rather than discouraging it through higher taxes. He called the proposal "unfair" and said it would target a population segment that is already overtaxed.

"It would affect everyone eventually," said Cathy Woods, president of the Greater Bowie Chamber of Commerce.

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