Dish, DirecTV Cheer House Sales Tax Bill

The nation's two direct-broadcast satellite providers are lauding the action of a U.S. House committee that has agreed to move forward with an industry-backed bill that would ban the application of state sales taxes differently for different video providers.

The bill still has far to go and has yet to face a full House or Senate vote, but that didn't stop DirecTV and Dish Network from issuing a joint statement outlining their collective hope that the bill would pass this legislative session.

The DBS providers have aggressively fought each of the six states who have applied sales taxes to their services. The companies argue that satellite-delivered service has no taxable local presence. But they have not had much success; for instance, in January a federal appeals court refused to strike down a 7% sales tax applied to DBS providers in 2005, noting that federal courts can enjoin states from applying taxes.

In testimony on the bill in February, officials with the DBS companies testified that such bills are passed to mollify cable interests, who lobby for taxes that will equalize the amount of franchise fees plus taxes paid by cable operators. Franchise fees are rent, not taxes, they asserted.

The one-paragraph bill would prohibit any state from imposing a direct or indirect tax that results in different charges being imposed on “substantially equivalent” multichannel-video providers, based on the method via which those services are delivered. The bill is directed toward Internet-protocol delivered television services, DBS and cable television.

“Today's vote was a victory for all consumers, satellite and cable alike, who want to chose their video provider based on price, quality and customer service, not based on which one has a lower state sales tax,” the DBS companies said in a joint statement.