Satellite Firms Praise Tax Bill

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DirecTV and EchoStar Communications lauded a Congressional bill introduced to “prevent discriminatory state taxation” among multichannel video-service providers.

Satellite-TV providers 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 direct-broadcast satellite-TV 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 and satellite companies do not.

DirecTV and EchoStar have sued Kentucky, Tennessee, Ohio, Florida and North Carolina over the tax levies. On Sept. 18, the 6th U.S. Circuit Court of Appeals refused to review its own ruling that a Kentucky tax on satellite TV — a 3% excise tax and 2.4% tax on gross revenues — is unconstitutional.

The bill — introduced by Reps. John Conyers (D-Mich.), Chris Cannon (R-Utah), Rick Boucher (D-Va.) and Trent Franks (R-Ariz.) — is dubbed the “State Video Tax Fairness Act of 2007.” It would bar states from imposing a discriminatory tax on any means of providing multichannel video-program distribution services including Internet Protocol TV, satellite TV or cable.

The bill defines “discriminatory taxes” as those imposed on “substantially equivalent” pay TV services.

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