Some voters in Los Angeles, California feel they’ve been gypped. Last month, a proposal (Measure S) to introduce a tax on VoIP phone calls was passed by a margin of nearly two-thirds. Measure S added a nine percent tax on Internet phone calls, with the apparent stipulation that the funds raised would go toward beefing up police protection in the city.

 

Turns out, however, that the taxes are simply getting dumped into the city’s general fund, Heartland Institute said in a Monday report. Some voters claims they were deceived into supporting the new law because the funds are not being earmarked as expected.

 

Brendan Huffman, president of the Valley Industry & Commerce Association (an organization that promotes the interests of businesses in the San Fernando Valley), said Measure S was introduced too quickly, without giving opponents time to mount a defense.

 

“We were disappointed at how the Los Angeles City Council placed this measure on the ballot,” Huffman was quoted as saying in the Heartland Institute report. “It came out of nowhere.”

 

Even worse, Huffman said, the tax was proposed just two weeks after the Los Angeles City Council gave 20 to 25 percent raises to all the municipality’s employees, raising their wages to the pinnacle of city workers in the state. In saying so, he implied that monies from the tax might be going simply to fund pay increases for city employees.

 

But, perhaps voters need not get themselves too worked up about the VoIP tax. FierceVoIP claims the law won’t stand up in court. That’s because of action taken last fall by U.S. Congress—extending for another seven years a moratorium on Internet-based services being taxable at the Federal, state or local level.

 

The Congressional bill was signed into law by President Bush on November 1, 2008, Heartland Institute said in its report.

 

For more commentary on the VoIP tax, please check out this blog post by Rich Tehrani (News - Alert).