Kentucky legislators have approved a tax-parity measure that will draw direct-broadcast satellite into the state’s tax pool.
Late Tuesday, the state House approved a taxation overhaul containing multiple new taxes and revised tax rates. The bill effectively eliminates local cable-franchise fees and replaces them with a 3% excise tax on video service, including DBS, plus a 2.4% gross-receipts tax on the companies.
Members of the Kentucky Cable Telecommunications Association were pleased with the end result of the taxation bill.
"For five years, our association has been working toward tax parity. This bill achieves it," said Paul Butcher, owner of Big Sandy TV Cable of Paintsville and the association’s president.
Cable operators lobbied cities and counties for support of the proposed tax policy, noting the revenue drain municipalities have suffered when consumers switched from franchise-fee-paying cable operators in favor of DBS providers, which paid no local taxes.
Satellite services, meanwhile, advised their 450,000 customers in Kentucky to write their legislators to fight any tax. The original proposal would have added 7.62% taxes on satellite users, but the compromise bill brought that down to the 5.4% final levy. On their anti-tax site (www.stopsatellitetax.com/stoptax), the DBS companies said both tax rates are unacceptable.
Now the bill goes to Gov. Ernie Fletcher for approval. The governor has been the driving force behind tax reform and the new levies.