SACRAMENTO, CA - Thomas Andris was angry when he found out paying $50 tax on a $200 cell phone is legal in California.
He discovered it when he decided to replace his old cell phone with an iPhone 4S.
"I can verbally tell it everything that I want it to do. And I don't have to push a whole lot of buttons," Andris said.
Andris bought his new phone at AT&T for $199 and signed up for a two year service contract. When he arrived at home and checked his receipt, he was shocked.
"That's when I noticed a $50 tax on the $200 phone I bought," Andris complained. "I thought without any warning notice, that's not legal."
But unfortunately, it is legal in California.
"It's part of a bundle deal," according to former State Senator George Runner who now sits on the Board of Equalization. "They're saying the phone has a retail value that's greater than what the customer was charged. It's the difference between the retail value and what the customer was charged is made up over the period of time for their long term contract. Customers don't understand that. They want to pay tax on what they're charged because that's what happens when they buy anything else."
The California law allowing cell phone companies to tax consumers this way dates back to 1989. Runner said the Board of Equalization recently sponsored a bill that would change the law and stop the practice, but the measure didn't make it out of a committee.
"The state of California basically brought in $60 million a year from taxes on those transactions," Runner saID.
Andris is miffed with legislators.
"I don't think they're in office to get money for consumers," Andis said. "They just want to get money so they can be re-elected and campaign funds."
Andis still waiting for his new iPhone, which is on backorder. He's also still angry about how much tax he paid for it.
"That's just sticking to me," he declared.
By Karen Massie, kmassie@news10.net
News10/KXTV
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