Sacramento set to start taxing text message and broadband phone service

On Nov 4, Sacramentomatoes approved the "Utility User Tax Reduction and Fairness Measure," a new tax that goes into effect today. It includes a larger variety of communications services -- including text messages and broadband phone services. The tax update also includes lowering the user's tax for land-line and cell phones from 7.5 percent to 7 percent. Russ Fehr, Sacramento (CA) city treasurer, said the amount someone is taxed will vary depending on what types of communications services they have with their service provider. In other words, if you have a BlackBerry with unlimited texting and phone calls, your monthly bill is higher than someone with a cell phone plan of $29.99 per month. Traditional cell phone users, who use a land-line and a cell phone for only the occasional call, likely will see a tiny decrease in their bill because of the five-tenths of a percent the utility tax decreased, he said. "The vast majority of households will see a rate reduction," Fehr said. "A few households and businesses will see an increase." While the tax takes effect Friday, service providers have up to 60 days in which to include the tax on users' bills. City officials likely won't begin to see whether the tax is generating more revenue for at least a year and a half, Fehr said.