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Alexandria to Tax Cell Phones as Other Revenue Drops

By Robert MacMillan
Special to The Washington Post
Thursday, June 16, 2005

Using a cell phone is Alexandria is about to become more expensive -- $3 a month more expensive.

The City Council approved a new tax on cell phones as part of the fiscal 2006 budget. It will help make up some of the money that the city will lose after the real estate tax rate was lowered in order to provide relief to homeowners. Residents will see the new charge on their cell phone bills starting in September.

The tax will bring in an estimated $1.7 million in fiscal 2006, city officials said, about one-third of 1 percent of the city's $468 million budget. Residents will pay $3 a month on cell phone bills of more than $30, while those on lower-cost plans will be charged 10 percent of their monthly bill.

Other measures passed to offset the real estate tax cut include a 20-cent increase in cigarette sales tax and a new entertainment surcharge on items such as movie tickets.

Taxing the growing number of cell phone users should help offset the losses created by a reduction in the real estate tax rate, Mayor William D. Euille (D) said.

"I was just sitting in my car at the intersection. I looked around at 15 or 20 other cars, and everybody had a cell phone," said Euille, who estimates that he spends more than $100 a month on cell service.

Barry Murphy, a 46-year-old realty agent and Alexandria homeowner, said the tax amounts to about a latte a month for him. He carries two cell phones -- one that runs on Cingular's network and another on the Verizon Wireless network-- and uses whichever one gets better reception in a given part of town.

"I don't mind paying some taxes as long as [we get] more value" from the city, said Murphy, who pays several hundred dollars a month in cell phone bills.

But some residents said $3 could make the difference between being able to afford a cell phone and going without.

Tawanda Moore said she works 25 hours a week at the Fuddruckers restaurant on Duke Street for $7.50 an hour. She said the tax will make it difficult for her to buy a cell phone.

"There are other ways for [the government] to get their money," said Moore, 33.

For years, Alexandria has relied on a dependable 25 percent tax on local phone service, bringing in an average of $7.50 per phone line every month. But the revenue stream has been drying up as more residents drop their regular phone service for a cell phone-only lifestyle. There were about 113,000 residential and business land lines in operation in the city as of July 2004, a drop from more than 120,000 two years earlier, according to Bruce Johnson, director of the city's Office of Management and Budget.

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