(April 14, 2004) Proponents of the California Chamber-opposed phone tax initiative announced earlier this week that they have submitted signatures to place the measure on the November ballot, despite the withdrawal of the California Healthcare Association as one of the major sponsors.

'California's small businesses are already struggling with skyrocketing workers comp, unemployment insurance, and other costs and burdens to keep their doors open in our state,' said Jeanne Cain, Chamber senior vice president.  'This measure will make this situation worse by placing an unlimited tax on small business phone usage.'

The initiative places a new tax on phone services unrelated to phone system infrastructure. Although the initiative purports to preserve emergency care, what it really represents is $550 million every year in new consumer and small business taxes, with no guarantees that demands of the emergency care system will be met.

This phone tax has no caps on how much taxes can increase on small businesses or cell phone users. This tax represents a 400 % increase on Californians' phone bills.

”This initiative is misleading. Proponents are trying to gain support by emphasizing that money collected from this tax would go directly to the crisis in our healthcare system, but that's not the case,” said Jeanne Cain, Chamber senior vice president.  “'The money from this tax increase does nothing to actually improve health care or reduce health care costs in California.”

The phone tax initiative supporters are proclaiming that the tax money would go to into the State's 911 system, but in actuality less than 1 percent of the money raised will go into the system. This measure would only create costly new government bureaucracy with millions of dollars spent on ongoing administrative costs.

The Chamber opposes this tax because it has no nexus to the services it is intended to fund and places an unlimited burden on already struggling small businesses.

For more information on this initiative and other ballot measures of concern to business, please visit the political action page in the Government Relations section of our website at www.calchamber.com.