Chula Vista to Cash In on Telecom Revolution? Prop H to Decide

Chula Vista residents will have to pick their poison when they go to the polls November 2. Proposition H, a utility users’ tax, is posited by the mayor and city manager as a vital source of income needed to prevent cutbacks in police and fire protection and other city services. Opponents of the proposition say it is another attempt on the part of the City to impose a new tax on residents.

Proposition H proposes to widen the scope of telecommunications services that are taxable. According to the city attorney’s analysis of the ordinance, the language from a 1970s telephone users’ tax would be modernized to include “Private network communications (T-1 line), cell phones, voice-over-internet telephone services (VoIP), 800 and 900 services, pre-paid calling card services and pager services.” The taxation would also be broadened to cover interstate and international services. Money from this increase would go directly into Chula Vista’s general fund.

Jill Galvez is vice president of Fast Blue Communications and one of the authors of the Proposition H rebuttal. In a recent interview, Galvez replied “yes” when asked if this ordinance would have an immediate effect on some users. (For example, a person who has his or her phone bill bundled with other services from Cox Communications would be taxed more for interstate and international calls.)

Galvez also argues that the passage of Prop H would be a deterrent to new businesses that might be looking to establish themselves in Chula Vista. According to Galvez, “The cost for telecom services in Chula Vista is already higher than anywhere else in the county.”

Galvez feels the greatest injustice is that Chula Vista already taxes a number of telecommunication providers even though the muncipal code excludes "charges for services paid by users of mobile and marine telephone service." According to Galvez, "Wireless subscribers have been paying this unauthorized tax for years."

The San Diego County Taxpayers Association opposes Proposition H because the additional tax revenue is not tied to reform and because the ballot language does not communicate that Prop H means a tax increase. The ballot proposal begins, “Shall the ordinance to modernize the City’s l978 Telephone User’s Tax (renamed the Telecommunications Users’ Tax), with no rate increase…”