A tax break may be ahead for cell-phone users in Portola Valley if Verizon Wireless wins its court fight with the city of Palo Alto over whether residents should be paying a utility users tax on calls made from cell phones with national calling plans.
All cell-phone companies except Verizon collect the utility tax from residents of Portola Valley who are on national plans. If Verizon wins its lawsuit, the companies will likely follow Verizon’s lead — and cost Portola Valley about $50,000 in lost revenue, said Town Attorney Sandy Sloan.
The city of Palo Alto sued Verizon last fall for back taxes the city said Verizon owed. A Santa Clara County Superior Court judge sided with Verizon, but the city is seeking a new trial.
Portola Valley’s tax on water, gas, electricity and phone bills is 20 years old and voters recently renewed it for another four years. Most of the current tax — 5.5 percentage points — goes into the town’s general funds; 2 percentage points go toward the purchase of open space. The town anticipates collecting about $834,700 from the tax in the budget year that ends June 30.
Those revenues would drop if Verizon wins, but they will drop even further if residents vote to cut the 5.5 percent rate to 3.5 percent in the June election. The ballot measure is the Town Council’s way of asking voters how to respond to the county’s surprise increase of about $493,000 a year in property tax payments to the town.
@sub:Correction
@text: In a February 2 interview with the Almanac, Ms. Sloan said Portola Valley’s utility tax ordinance did not allow the taxing of cell phone calls.
But after conferring with town staff, she said she found that cell phone calls other than those made by Verizon customers were being taxed after all.
The ordinance is “ambiguous” and subject to different interpretations, she said. “We will just wait and see what happens with that lawsuit.”
