Arguments on both sides of Santa Rosa cellphone tax under fire

The campaigns for and against Santa Rosa’s plan to tax people’s cellphones released last-minute messages this week that range from arguably misleading to outright false.

The business groups against Measure N released a mailer this week that states the measure would tax “all Internet services.” But that’s not true, said Nick Caston, the political consultant working for the firefighter-backed “Yes on N” campaign.

The 4.5 percent tax would apply to telephone services that use Voice over Internet Protocols, but it would not apply to Internet access charges, such as a Sonic.net customer’s bill, Caston said.

In addition, the mailer by “Citizens Against a Tax on Our Cell Phones - No on N” claims that people will face penalties “if you are a single day late paying your bill.” That, too, is false, Caston said.

“They are trying to cast doubt on this measure and they are doing it with lies,” he said.

There is a 15 percent penalty plus interest for utilities that fail to pay the city on time the taxes they collect from residents and businesses. The same penalty applies to users who have “deliberately withheld” the tax from their utility, according to the proposed law.

The city’s utility users tax on telephone, cable, gas and electric bills has been around since the 1970s. Under Measure N, which is being called the “UUT Modernization and Fairness Measure,” that percentage would drop from 5 percent to 4.5 percent but be expanded to cover cellphones.

Richard Coombs, a partner in the Airport Business Center who is spearheading the campaign, acknowledged the mailer’s claim about “all Internet services” might not be accurate. The sentence probably should have said “some” to reflect telephone over Internet services, he said.

“We are more than happy to refine our mailers to be more explicit as to the portion about the Internet,” Coombs said.

However, he stood by the claim about the penalty for late payment. He pointed to a provision that allows the city’s tax administrator, at their discretion, to “modify the due dates and/or penalty and interest provisions” under certain circumstances in support of his claim.

But City Attorney Caroline Fowler said that’s not what that section of the law allows. That provision is meant to give flexibility on the dates in the event a centralized or statewide system is established to collect the taxes, she said.

Fowler called the flier and an earlier one that inaccurately suggested Netflix would be subject to the tax “extremely misleading.”

Coombs, who is suing the city over $136,000 he says his businesses have been overcharged by the tax, said he finds it odd his mailers are being called inaccurate.

He said is it the city that is guilty of misleading residents about the measure.

The city has never demonstrated it is in fact in danger of losing $1.6 million in revenue without the “modernization” of the ordinance, he said. He also doubts the money will be used to “maintain essential city services,” noting that the general tax applies to all general city services, including administration and pensions.

He said the city has not been up front with voters about the tax covering their cellphones.

“They’ve avoided the use of the word cellphone artfully in every single thing they’ve presented,” Coombs said.

Neither the ballot language nor Fowler’s “impartial analysis” of the measure expressly mention cellphones. Nor does the Yes on N campaign’s TV ad, which is running on Comcast.

That ad features Tim Aboudara, president of the local firefighters union, claiming the measure means a “safer Santa Rosa.” It also shows Councilwoman Erin Carlstrom standing in Juilliard Park holding her young son, Adlai, saying the measure would mean “investment in our parks, so our children can play,” and Nicole Ours, wife of Councilman Jake Ours, stating the tax means “our roads can be repaired and our streetlights turned on.”

The closest the ad comes to addressing the expansion of the tax to cover cellphones is when Aboudara says Measure N will “modernize our utility tax to include new technology.”

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. ?On Twitter @srcitybeat.