Article from National Taxpayers Union 11-27-07:
As you sit down to watch football games and holiday specials, you may not know that some states are starting to tax your TV service differently depending on how you receive the signal. You and your neighbor could be enjoying the same TV shows, but you could be paying more in taxes if you’re using a satellite dish while they’re subscribing to cable. Sounds ridiculous, but it has happened in six states so far.
Legislation before Congress would stop these discriminatory taxes, but TV viewers and taxpayers need to round up support for the bill on Capitol Hill if we want it to pass. In the time it takes to watch a commercial, you can join us in telling Congress to stop unfair television taxes! Act now!
What is at stake:
The State Video Tax Fairness Act (H.R. 3679) would address the growing issue of discriminatory state video services tax policy by prohibiting inequitable net taxes that are dependent solely on the mode of programming delivery. In plain-speak, this bipartisan bill would simply outlaw discriminatory state sales taxes on similar TV programming products.
The need for this legislation is clear. Right now, six states (Florida, Kentucky, North Carolina, Ohio, Tennessee, and Utah) levy video service taxes on satellite television that are measurably higher than those levied on cable television. Tax laws shouldn’t be used to build in an artificial competitive advantage for one type of product over another.
While cable providers are often required to pay franchise fees, these are usually in exchange for public rights of way to lay cable. Similarly, satellite TV signal providers have had to pay hundreds of millions for FCC licenses and millions in annual fees. From the consumer perspective, the satellite TV tax is a burden other TV viewers don’t have to bear — hardly a fair policy.
NTU has pointed out that much of the debate over tax discrimination in the video services community has improperly focused on a form of “fairness” that only fills government’s coffers further — that is, making sure providers of similar services suffer the misery of equally harsh taxes. We’ve reminded policymakers that the “fairest” fee or tax rate — for providers and taxpayers alike — is zero. Telecommunications of all varieties have been targets for disproportionate and punitive taxes since the Spanish-American War, slowing much of the progress and productivity that could have emerged to enrich our society sooner.
Failing the most far-sighted tax policy of a zero rate, at the very least state and local governments should not discriminate among products or services by disadvantaging one with heavier taxes. Passage of H.R. 3679 would help ensure that consumers — not the states — pick marketplace winners and losers.