DirecTV and EchoStar are lauding a Congressional bill introduced to “prevent discriminatory state taxation” among multichannel video service providers.
The satellite TV firms have argued that because their product is delivered from the sky, they should be exempt from state taxes. But at least six states have applied sales and other taxes on DirecTV and Dish Network customers.
Often these levies are at the behest of cable operators who argue that they are at a competitive disadvantage in local markets because they pay franchise fees and other local taxes which DBS companies do not, for substantially similar services.
The two DBS providers have sued Kentucky, Tennessee, Ohio, Florida and North Carolina, challenging their tax levies.
On Sept. 18, the U.S. Court of Appeals for the 6th Circuit refused to review its own ruling that the Kentucky tax on DBS, a 3% excise tax and 2.4% tax on gross revenues. The state tax levy is not unconstitutional, that court said.
The bill, introduced by Reps. John Conyers (D-MI); Chris Cannon (R-Utah); Rick Boucher (D-VA) and Trent Franks (R-AZ) is dubbed the “State Video Tax Fairness Act of 2007.” It would bar a state from imposing a discriminatory tax on any means of providing multichannel video program distribution services including Internet protocol, direct-broadcast satellite or cable TV services.
The bill defines “discriminatory taxes” as those imposed on “substantially equivalent” MVP services based on the way they are delivered.
In a prepared statement, the two DBS providers said, “Imposing taxes on one competitor and not the other is just not in the public interest because, as consumer groups who support more entrants in the video marketplace have said, it takes away from competition.”