Increased taxes on cable and direct-broadcast satellite service are part of the $17.2 billion budget approved Aug. 11 by the North Carolina legislature.
The sales tax rate on both vendors will now be 7%. However, cable businesses will get a 5% credit against the state levy for the franchise fees they pay to local governments.
The lawmaker approved the slight uptick in the taxes collected from DBS customers despite the fact that the satellite industry has already filed a lawsuit challenging the original sales-tax rate of 5%. That suit was filed in 2003, after a request for consumer refunds by the DBS companies to the state Department of Revenue was denied.
DirecTV Inc. and EchoStar Communications Corp. have filed tax challenges in Kentucky, Florida, Ohio and Tennessee, as well as North Carolina, alleging that taxes on DBS are unconstitutional because DBS service does not impact local infrastructure.
The North Carolina increase will impact an estimated 900,000 DBS customers in the state.