Stop Discrimination Against Satellite Subscribers:
Cosponsor HR. 3679, the State Video Tax Fairness Act

Six states have imposed discriminatory sales taxes on direct broadcast satellite (DBS) service, with no burden or a lesser burden placed on cable subscribers, and more states are threatening to do so. States with discriminatory DBS taxes are: Florida, Kentucky, North Carolina, Ohio, Tennessee and Utah.

Just recently, an Ohio state court struck down its discriminatory law. Said the court, "Having been prevented by Congress from using its regulatory powers to reduce competition between the two industries, the State of Ohio is trying to accomplish the same thing through its taxing power." The DBS industry certainly hopes this trend will continue, but the costs of litigating these cases is enormous, and ultimately is reflected in the costs that consumers pay for their satellite services. That is why there is a need for Congressional intervention.

Cable falsely argues that DBS should be taxed because cable pays franchise fees.

• DBS does not use local rights of way, and therefore should not pay a franchise fee, and cable gets tremendous value for use of their franchise (video, phone, and data revenue streams) while DBS subscribers get nothing in exchange for their discriminatory state sales tax.
• Far from a free ride, DBS has paid handsomely over the years for its FCC licenses: over $1.2 billion, and over $1.2 million in annual fees.
• Cable franchise fees are capped under federal law at 5% of gross revenues, but the DBS sales taxes often are much higher than that.

DBS consistently beats cable on price, quality, and service and is the strongest market deterrent against cable rate increases. That is why the cable industry lobbies states to impose discriminatory DBS taxes-- cable is trying to artificially inflate the cost of DBS.

Discriminatory DBS taxes harm all consumers by:

• Protecting high and ever increasing cable rates by inflating competitors' costs; and
• Making satellite subscribers pay more for their TV service;

Discriminatory DBS taxes mean less revenue to state governments because cable escapes paying its fair share.

• In a discriminatory regime, cable operators either do not owe any sales tax or credit against their state tax bills the franchise fees they pay to localities.
• In a non-discriminatory regime, cable must pay its fair share of state taxes: whatever DBS subscribers pay, cable subscribers must pay the same.
  • Franchise fees –which cable operators pay for use of streets and other public rights of way-- are not the same as taxes, which generally apply to all citizens.
  • Cable-sponsored discriminatory taxes cloak the discrimination in complicated tax credits or subsidies back to cable operators for the franchise fees they pay.