Torrance Unplugs Mobile Phone Tax

Torrance city officials thought they had conjured up a modern means of raising money.

This spring, they decided to impose a new tax on the use of mobile telephones, figuring it would generate an extra $20,000 a year for city coffers. Mobile-phone users with a Torrance billing address were to pay a city tax of 6% on their phone calls originating from or terminating in Torrance.

But on Tuesday, less than two months after the tax went into effect, the City Council postponed the idea indefinitely.

The problem, it seems, is that billing technology has not kept pace with telephone technology: Mobile telephone companies cannot determine exactly where a call originates. And although they can discern the prefix of the telephone number called, those prefixes cross city boundaries and do not show that the call necessarily went to Torrance.

Computer software is available to collect that information, but Benjamin J. Murdoch, the city’s revenue administrator, said the city was told it might have to pay as much as $15,000 for software for each of 25 or 30 cellular telephone companies.

That did not seem efficient for a tax that would collect only $20,000 a year, he said.

“It’d cost you a dollar to capture a dime,” said Neil Fitzpatrick, director of external affairs for PacTel Cellular, which operates a five-county cellular telephone system in the Los Angeles area.

“The more we sliced it down, the less and less revenue it was, and the more complicated it was,” Fitzpatrick said.

So the tax has been on hold, said City Finance Director Mary Giordano, “until there’s a better mechanism to track phone calls. And when that is, is anyone’s guess.”

City officials intended the new tax to be an extension of the 6% utility users’ tax that the city already levies on regular telephone, gas, water, electricity and cable television use, Murdoch said.

The city mailed letters to several mobile telephone companies, informing them that the tax was under consideration.

“They weren’t happy about it, but they said, ‘Fine, as long as you only do it for Torrance residents. Don’t try to tax the resident of someplace else traveling through Torrance,’ ” Murdoch said.

The tax went into effect July 1, the start of the city’s fiscal year. But early this month, city officials said, they discovered the flaw in the plan.

It is unlikely that any Torrance mobile phone users actually have been taxed the 6% by their cellular telephone company, Murdoch said. But if companies have charged the tax, he said, “We’d tell them, ‘Just give it back.’ ”