DirecTV, EchoStar Fight Ohio Tax - Multichannel

DirecTV, EchoStar Fight Ohio Tax

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Making good on their threat, DirecTV Inc. and EchoStar Communications Corp.
have filed suit in Ohio challenging a satellite sales tax included in the state
budget package signed Thursday by Gov. Bob Taft.

The direct-broadcast satellite companies argued that the 6% sales tax in the
omnibus budget-reconciliation bill is unconstitutional because it will not be
applied to cable-TV services. A cable sales tax was in an early version of the
budget, but it was removed when operators argued that they already have a
substantial tax burden.

The lawsuit was filed Thursday in the Court of Common Pleas in Franklin
County, Ohio. It seeks a permanent injunction against implementation of the tax
on the approximately 700,000 DBS customers in the state, according to the
companies.

The satellite-only tax will afford cable "a direct commercial advantage" and
unfairly tax companies that do not use public rights-of-way, according to the
companies.

The DBS companies threatened the suit last week after the legislature
approved the budget including the DBS tax. Taft has line-item veto power, so he
could have cut the tax from the final document, but he did not do
so.

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