Gov't unions lobby for more dues income

State leaders of Big Labor -- including the AFL-CIO and the American Federation of State, County and Municipal Employees -- have told supporters of several local tax-increase measures in California that they are willing to commit "whatever it takes" to ensure the ballot measures pass on February 5, 2008, according to a state AFSCME member.

Right now, several large localities in California, including the cities of Los Angeles, Pasadena, Richmond, and San Bernardino, are pushing utility "modernization" ballot measures that would essentially raise consumer taxes on Internet and cell phones users.

The unions are getting behind the measures because the bulk of the tax dollars raised from the change in local tax laws would go toward civil service costs related to public safety and municipal operations -- in other words, their membership.

"It's kind of surprising that anti-tax groups haven't been pushing harder against these initiatives," says a Southern California political consultant. "We're talking about millions in new tax revenue off these little changes, and it's all being done through the backdoor."

Essentially, what the localities are trying to do is extend a 40-year-old utility tax on phone service to services that most consumers use over the Internet or on their cell phones or Blackberrys.

"The old utility taxes are between 10 and 7 percent per month, and show up on the bottom of phone or cell phone bills," says the consultant. "Some municipalities are actually lowering the rate with their ballot initiatives, but changing the definition of what a 'phone service' is to include things like data services, so while the rate may appear lower, most taxpayers who use those services will actually see the amount they pay in taxes go up. Some may even see their cell phone tax bills double."

Data services include things like text messaging, music and video downloading, and down the road, many policy experts in the field believe even e-mail could be taxed under a "data service" definition.

The city of Pasadena, for example, is calling its initiative, Measure D, a utility tax "modernization" plan. While the rate of the utility tax would remain at about 8 percent, the city would impose the tax on consumers who use text messaging or who download music or movies online.

"These pols are being clever. They tell the voters 'We aren't raising taxes and we aren't taxing the Internet,' and they are being accurate, but in fact, they are taxing what you use the Internet for," says state assembly staffer. "They are being accurate, but they aren't being honest with the voters."

Adding insult to injury, the campaigns in support of the tax-increase initiatives are being financed by the municipalities and the labor unions, in other words, by taxpayer dollars.

AFSCME, according to the state union official, is prepared to commit more than a million dollars to get the local initiatives passed. "It could mean three to four times that in money back in union-member pockets," says the official. "This is worth the investment."


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