County eyes $4 phone tax
Consumer, business groups oppose idea
Saturday, October 13, 2007
by Jon Van | Tribune staff reporter
A $4 monthly tax on every telephone line in Cook County, including mobile phone lines, is one proposal under consideration as county government struggles to close its budget gap.
County commissioners are looking at a variety of proposals to balance the budget, and opposition is stirring from consumer and business interests over the idea of a telephone tax, which was quietly raised in recent weeks.
No hearings have been held on the proposed new tax. Until now it has been "flying under the radar," said David Kolata, executive director of the Citizens Utility Board. "We understand this proposal is on the front burner and is very serious. It gives new meaning to the term 'pay phone.'"
The phone-tax proposal was introduced to the County Board by Commissioner William Beavers, who did not return several telephone calls made to his office Friday. A nine-page draft of the proposed "telecommunications tax ordinance" was circulated to county commissioners on Sept. 18.
A CUB analysis determined that the tax, if passed, would add $20 a month in phone taxes for an average household with five phone lines, including a landline, a cell phone and a high-speed Internet connection.
Low-income households would be especially hard hit by the proposed phone tax, said Rev. James Demus, founder of the Ministerial Alliance Against the Digital Divide. He noted that Mayor Richard Daley's proposed budget for Chicago also calls for adding $1.25 to monthly phone bills to increase payments for 911 emergency service.
"It's unfair and egregious," said Demus, "and is an undue hardship on poor people. We understand the needs of the county and the city, but we think this phone tax is exceedingly unfair."
Executives at AT&T Illinois also expressed concern about the proposed phone tax.
"Almost 25 percent of the average Chicago family's phone bill already goes to taxes and fees," said Andrew Ross, an AT&T spokesman. "That would jump to 40 percent with this additional tax. We hope the idea of greatly increasing the cost of using any phone in Cook County is rejected."
Politicians like to add taxes to bills for phone service and other utilities because they hope to hide the true cost of government, said Doug Whitley, president of the Illinois Chamber of Commerce.
"The philosophy is to hide the true cost of government by making the consumer think he's got a high phone bill," said Whitley, who headed Ameritech Illinois before it was taken over by the company now known as AT&T.
Whitley said a significant new phone tax would raise the cost of doing business in Cook County, and that some operations with many phone lines, such as call centers, likely would look at moving outside the county to escape the tax.
He said that companies with offices outside the county also might look at having their cell phone bills sent there to avoid being hit with an added $4 a month for each cell phone.
"Cell phones are extremely portable," Whitley said. "I think some companies will adopt tax-avoidance strategies."
On Friday the Citizens Utility Board put a call to arms on its Web site, asking consumers to support its opposition to proposed new local taxes. CUB also opposes a proposed energy tax on gas and electricity that it says would cost the typical customer about $119 more in the first year.
The county is looking for ways to reduce a projected deficit of $307 million for 2008.