Phone companies oppose Baltimore telephone tax hike

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Representatives of three major telecommunications companies urged members of a Baltimore City Council committee Thursday not to raise a local tax on phone lines, saying customers could opt to have their service based in a surrounding county as a way to avoid paying the city tax.

The hearing was the latest chapter in the ongoing budget saga at City Hall, where members of the council are attempting to sculpt an alternative revenue package to the $50 million in tax and fee increases proposed by Mayor Stephanie Rawlings-Blake.

The mayor’s increases are aimed at solving a $121 million budget shortfall, a crisis that could bring layoffs of city employees, including cutbacks to police and fire services as well as closing recreation centers for youth.

At yesterday’s hearing, telecommunications officials from Sprint, AT&T and T-Mobile said the proposed increase in the local monthly tax to $4 per land and cell line was “regressive” and akin to a “sin tax,” the high tax imposed on cigarettes and liquor.

Council members defended the proposed increase, saying it spreads the pain of plugging the budget gap around to all levels of city residents.

“It is one of the few taxes that everyone pays,” said Councilman James D. Kraft, who represents East Baltimore, Canton and Patterson Park. “Some residents don’t pay income tax, some don’t pay property tax, but they do have a cell phone, and they receive city services. It’s not too much to ask for when you see what they’re getting for it.”

Sprint official Gary Horewitz said the tax increase could prompt city phone customers to base their service in another jurisdiction, citing Baltimore County’s state and local phone tax and fees that total 7.7 percent per phone line, as opposed to the city’s current 25.2 percent per phone line. With the increase, the total taxes and fees for a city phone line would rise to 27.7 percent.

Users could have their phone bills sent to a relative’s address outside the city, he suggested.

“A federal law allows for a change of address, and if a cell phone bill is sent to a county address, we could not apply the Baltimore tax to it,” Horewitz said, prompting questions from council members about cell phone billing.

Baltimore’s per-line phone tax and fees are already the highest in the U.S., the phone companies representatives said. Washington’s rate is 13.8 percent of the total bill, New York’s is 20.6 percent and Philadelphia’s is 17 percent, they told the council.

In other action, the committee approved a proposal to levy a tax on video poker machines, estimated to draw $2.2 million — far less than the $5 million Councilman Robert W. Curran had originally planned. The proposal will go before the entire council for a vote on Monday night.

Also, the pronouncement Wednesday by a group of eight council members that they would replace the mayor’s proposed 4-cent container tax with other fees wavered yesterday.

Kraft, one of the eight, declared the container tax “dead” during the budget hearing but then added, “But never say never.”

Councilwoman Mary Pat Clarke, whose district includes Waverly, Roland Park and Hampden, said the container tax was still a possibility as the council attempts to piece together its own revenue package to avert layoffs and deep budget cuts.

“It’s not dead,” she said. “Everything is still on the table.”

The beverage lobby has worked to kill the proposed container tax, setting up a Facebook page to attract public opinion and sponsoring regular radio advertisements against it.

The city’s $2.2 billion budget takes effect July 1.