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Cable customers ‘taxed’ by Manteca, satellite users aren’t

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POSTED November 3, 2009 3:54 a.m.

Comcast Cable TV customers are getting hit with pass-thru franchise fees that are projected to bring in $500,000 into the City of Manteca’s general fund when the fiscal year ends June 30, 2010.

There is little doubt the revenue is needed. But there are a couple of little problems – is it fair and how long will the revenue be at that level?

The philosophy for taxing cable service once upon a time revolved around the fact it was a luxury plus it needed city permission to put in lines along public streets. Satellite TV has dynamically changed the playing field. They don’t need to string lines to serve customers. So someone with Dish Network, for example, is avoiding the $1.06 per month “franchise fee tax” that Comcast is assessed per customer and passes on to those using the service as delineated in monthly bills.

I can’t picture myself giving up cable. I’m not wild about a dish on top of the roof. That aside, why is Comcast being penalized in the competitive market and why am I paying a tax on essentially the same service that a Dish Network customer is getting?

It is yet another example of new technology escaping taxes.

The bigger question, of course, is whether it is time to completely overhaul our taxing system. Manteca – or any city or county for that matter – can’t do anything without new rules put in place by the state. And the latest proposals outlined by the California Century Commission to shed a number of existing taxes and replace them with some that are more equitable and less likely to choke business as well as being designed to put in place a more even flow of revenue for government has been kicked to the curb.

Why? The Republicans fear it will raise tax receipts and the Democrats fear it will reduce tax receipts. Those two reactions in themselves mean the proposal has merit and needs some serious scrutiny for possible implementation.

Vallejo voters today will decide on a utility tax that mirrors the cable TV vs. satellite TV tax dilemma. The council in the Bay Area city that has filed bankruptcy wants to expand the utility tax to cell phones that they already have in place on land line phones. Of course, cell phone use is substantially cutting back on land lines and reducing Vallejo’s revenue from that source. Proponents argue it is a matter of equity.

Really. How equitable can any tax be on cell phones with the wide range of plans? Do you charge per minute used or on a percentage of the overall bill? Why should someone who uses 1,000 off peak hours (and usually free are time) be taxed less than someone whose usage is all at peak times?

No one in Manteca at this time should have the stomach to push for new taxes. In time, though, the need will come.

That is why it is imperative that civic leaders form a blue ribbon panel consisting of elected council members, the business community and the general public to explore overhauling Manteca’s taxing system in the perimeters provided by the state.

The goal of such a panel needs to be simple: Taxes need to be equitable and fair, those taxes that aren’t need to go, and the city needs to have stable income that can grow as the city grows.

Restoring the utility tax on municipal services such as water, sewer, and garbage service is probably the most equitable although it is regressive on those who have less income.

Let’s say the panel recommends the city pursue the restoration of the utility tax at “x” dollars per month. It should contain language that if it is approved, the cable TV tax is dropped.

Obviously, you can make the case about the cable TV tax being unfair but it isn’t illegal. However, it only makes sense to drop it if a new tax is put in place that won’t be impacted by changes in the market place or technology. Everyone who rents or owns a residential unit has to flush a toilet and use water. It is a universal tax.

Other options are everything from retrofitting areas with landscape maintenance districts to maintain parks to parcel taxes.

No one likes paying taxes but everyone uses government services. At the same time no one likes taxes that are unfair or a government that abuses tax receipts by spending them foolishly.

Now that Manteca has become lean and mean the next step needs to be taken to put in place a tax that doesn’t fluctuate substantially and only grows as the city grows.

To contact Dennis Wyatt, e-mail

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