(March 25, 2004) The California Chamber of Commerce is working to educate voters about the truth behind the Chamber-opposed phone tax initiative that supporters are trying to place on the November ballot.

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.

'The money from this tax increase does nothing to actually improve health care or reduce health care costs in California,' said Jeanne Cain, Chamber senior vice president. 'Putting this unlimited tax on small businesses already struggling in this high-tax state would only further harm California's economy.'

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 California's phone bills because the more the cell phone is used, the higher the new tax will be.

There is no limit to the amount small businesses would have to pay each month. A new tax of this nature could ultimately drive businesses away and cost California much-needed jobs.

This measure would not only create costly new government bureaucracy with millions of dollars spent on ongoing administrative costs.

The proponents of this initiative are gathering signatures to be turned in by mid-April so they can put the phone tax initiative before voters in November.

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.

The Chamber opposes this tax because it has no nexus to the services it is intended to fund.

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

Staff Contact: Jeanne Cain