California Lobbyists Push DBS Tax - Multichannel

California Lobbyists Push DBS Tax

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California's cable lobbyists are busy these days, trying to avoid taxes on their constituents while drawing regulators' attention toward the competition.

The California Cable Telecommunications Association has resurrected a proposal from last session, designed to tax direct-broadcast satellite services at a level that's closer than the levies paid by cable companies, if not on par with them.

Gaining passage of a DBS tax is the association's top priority this session, lobbyists said.

The industry notes that the state's operators pay the highest taxes in the nation, including utility and possessory interest taxes, plus franchise fees.

Lobbyists are informing legislators that 23 percent of the video market is served by DBS, yet those operators pay no franchise fees or taxes.

By contrast, California operators pay between 11.8 percent and 18 percent in taxes. The CCTA-sponsored proposal would place an 8 percent tax on DBS service.

Legislators are on record opposing new taxes. The cable industry even researched whether the levy could be promoted as a service fee, a difference in semantics but more palatable to lawmakers.

But Gil Martinez, the CCTA's vice president of government affairs, said such a fee must be directly related to the cost of oversight, so the cable industry is back to the uphill battle promoting a tax.

"We've had 43 meetings. Not one legislator can argue against the fairness of the proposal," he said. Opposition now "is completely political," he added.

The state faces a $36 billion deficit, due to the downturn in the economy coupled with high electric-power costs over the last two years.

Tax plans debated

Budget-resolution proposals are bouncing around the state Capitol in Sacramento, including proposals that would place a tax or service fee on cable.

A simple majority in the state Assembly and Senate could approve such taxes, so lobbyists and operators are working the halls, said Martinez. The association believes that it has convinced at least half of the known supporters of a tax or service fee to back away from the proposal, he added, but other lawmakers are still in active pursuit of the measure.

The group is citing a February poll concluding that Californians are opposed to service taxes, he said.

But another fire to be stomped out has sparked in the Senate, where the leadership is examining the feasibility of taxes on rights-of-way, Martinez added. This would be a new levy on ROW already in use by telecommunications providers.

In addition to the tax bills, cable operators are nervous about an Indian land-rights bill that has again been proposed, despite Gov. Gray Davis's veto last session. The bill seeks to create an 80-mile buffer zone around Indian lands or significant sites.

With that power, a tribe would have approval over construction and other work within those zones. Martinez said the proposal is too vague and doesn't even identify the covered sites. With such broad power, a tribe could delay or curb projects such as a cable upgrade, the association fears. This would have the greatest impact on Comcast Corp., which has pledged $400 million in rebuilds in the state through 2004, Martinez noted.

In the past, tribal land conflicts have delayed cell-tower construction and the placement of other uplink hardware.

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