Baltimore sues Vonage for back excise taxes

The city of Baltimore has sued Vonage to collect an excise tax Vonage insists it shouldn't have to pay.

As part of a deficit-reduction plan passed in 2004, the city imposed a $3.50 monthly tax on cell phones and land lines. Baltimore now says that the tax should apply to Internet phone services such as Vonage. 

"The service that Vonage is providing clearly fits the definition of a telecommunications line," said Joshua N. Auerbach, an assistant solicitor in the city's law department.

The Baltimore Sun's John Fritze writes that Baltimore city code defines a telecommunications line as a wired or wireless connection, identifiable by a unique telephone number, to an exchange, wireless or other telecommunications service.

For its part Vonage says they offer an information service, not a telecommunciations service.

Vonage says it will fight the suit, which also asks for back taxes, interest and a 10 percent penalty.

Because the exact number of Vonage subscribers living in the city of Baltimore is unknown at this point, no dollar amount has been placed on the suit as well as the suit's additional components. 

My thoughts: an ill-advised tax grab from a financially distressed city under budgetary pressure from failed social policies and the loss of tax base from middle-income residents fleeing the city.

Watch "The Wire." You'll get an idea what I mean.