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TV Taxes Are Eyed in N.Y.

12/19/2008 7:00 PM Eastern

Cable and satellite companies and their customers could be paying more for service in New York State, based on a proposed budget presented Dec. 16 by Gov. David Paterson.

Among the 88 new fees, 10 fines and 39 new tax items in the budget, Paterson has recommended applying a sales tax on video and radio services delivered by cable, satellite or “by similar means.” Paterson justified the recommendation by noting that 23 other states tax video. The current sales tax in New York state is 4%.

Timothy Rooney Jr., CEO of the Cable Telecommunications Association of New York, said his trade group is still studying the plan.

“It's not definite where [the proposal] is going yet … There are many new taxes, fees and spending cuts. Given the sheer size and complexity [of the budget proposal], we need to analyze it,” he said.

Some legislators are already criticizing the plans, and some of the industries to be hardest hit, such as health care, crafted TV ads within two days, suggesting alternative ways to make up the deficit in place of the cuts they face.

Satellite providers have not accepted any state tax levy attempted upon the service, challenging each in court. The providers argue that as satellite-delivered services, they create no taxable local presence, nor do they use local infrastructure. In fact, one of the states which approved a satellite tax, Ohio, is currently considering repealing the levy, as a state court has tentatively ruled it unconstitutional.

Some telephone customers could pay more, too, for another recommendation is an increase in the regulatory fee paid by utilities. That levy would increase from 0.33% of interstate revenues to 1%.

Paterson and lawmakers are trying to close an estimated $13.7 billion gap, and the cutbacks and new taxes hit agencies, schools and industries across the board.

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