The Star-News


Chula Vista Chamber of Commerce supports Proposition H

Sat, Oct 23 2010 12:00 PM Posted By: Lisa Cohen

The Chula Vista Chamber of Commerce Board of Directors voted on September 8 to support Proposition H.

Why would a chamber of commerce support a local tax? Because we know in order to attract and retain businesses and customers you need a city that is safe, clean, well planned and provides a high quality of life for its residents. The money collected from the Telephone Users' Tax (TUT) has been revenue the City has been collecting for over 40 years and helps pay for the quality of life that we all enjoy today in Chula Vista.

How would Prop H help save Chula Vista's quality of life?

Prop H is designed to protect one of the most reliable sources of existing locally controlled revenues that fund street repairs, park maintenance, recreation and library facilities and public safety. The TUT revenues are invested locally, unlike property tax and sales tax, which can and have been taken away from local governments at the state level. By voting yes on Prop H, you will be securing this revenue.

Why does the Telecommunications Users' Tax (TUT) ordinance need to be updated?

The TUT ordinance has not been updated since it was established in 1970. Our City's current municipal code, therefore, is based on the 1970 technology and industry billing practice of charging for calls based on time, distance and location. It includes language services such as "ship to shore," radios and "walkie talkies."

A great deal has changed in the telecommunication industry since 1970. And the technology the industry uses will continue to change. For instance, two major communication companies have officially announced they are getting out of the traditional phone business (meaning providing landline service to customers) in California within the next 7 years.

Currently 77percent of the City's telecommunications revenue has already transitioned away from landline to mobile and other communication options. The FCC and industry estimate at least seven out of 10 phone customers use only mobile phone service. Updating the ordinance and language would mean the City would be able to officially collect mobile phone service taxes that most telecommunications companies are already charging customers. In fact, the tax is already listed on most customers phone bills.

What will this cost you, the taxpayer?

The proposed ordinance would not change what 95 percent of current Chula Vista ratepayers are currently paying. In fact, look on your telecommunications bill to see what you are already paying these companies. The reason the majority of ratepayers would not see an increase is because most of the telecommunications providers are already applying the Streamlined Agreement to their customers. Most of these customers are also part of a fixed price package or bundled service agreement-therefore already paying into the full Telephone User Tax.

How much money does the TUT currently generate?

The TUT generates approximately 5.6 million dollars. For comparison, $6 million annually pays for one of the services below:

¥ 50 police officers, or

¥ 57 firefighters, or

¥ Traffic, Property Crimes, Family Protection and Violent Crimes Investigation Units, regular staffing for a one_engine Fire Station, and the Fire Prevention Unit, or

¥ Over 50 percent of the Public Works Department (such as road repairs and park maintenance and), or

¥ The Animal Care Facility and all three libraries - Civic Center, South Chula Vista, and Eastlake, or

¥ Almost all recreation centers and libraries.

How would Prop H help our City?

If Prop H passed, it would create new definitions of the existing ordinance. If adopted, it would establish a level playing field for the telecommunications industry and provide transparency for ratepayers. These definitions and practices were negotiated by the industry at the national level as part of the Streamlined Sales and Use Tax Agreement, and have been adopted by most California cities with TUT. One hundred and fifty companies have paid TUT to the City in 2010, and staff estimates that all but one company are paying what they should under the Streamline Act guidelines.

Do other California cities have a telecommunications tax?

Yes. Eighty-one out of 150 California cities have recently gone to ballot to modernize their municipal code ordinance. Other cities such as Los Angeles, San Francisco, Irvine, San Jose, Glendale, Huntington Beach, Modesto and Long Beach also collect the tax.

How does Chula Vista's rate compare to other California cities?

Chula Vista's 5 percent tax rate is in the bottom 30 percent of all 149 California cities with a telecommunications tax. Chula Vista's rate is the third lowest in the cities collecting the tax with a population over 200,000 people.

The Chula Vista Chamber of Commerce supports fair distribution and modernization of our Telephone Users' Tax by providing a level playing field for all companies to compete. By supporting Prop H, we recognize it goes hand in hand with the Chamber's mission. Our mission is to represent the business community by striving to preserve a working partnership of business and professional people that promotes, protects, and expands the free enterprise system, to enhance the members ability to conduct their individual businesses successfully, and to improve the economic stability of the community.

Together, businesses, Chula Vista City Council, City employees and voters can restore our city's fiscal health and protect the quality of life we all deserve!

Cohen is the CEO of the Chula Vista Chamber of Commerce.


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