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House Subcommittee Passes Video-Tax Fairness Bill

7/25/2008 11:25:00 AM Eastern

Washington — The House Judiciary’s Commercial and Administrative Law subcommittee Thursday approved a video-tax fairness bill that would require all states imposing taxes on multichannel video services to tax all pay TV service providers equally, without discrimination for the delivery technology being used.

The bill (H.R. 3679) still must move on to full votes from the House and Senate before becoming law, but the nation’s two satellite TV providers — DirecTV and Dish Network — issued a joint statement celebrating the action.

“Today’s vote was a victory for all consumers, satellite and cable alike, who want to choose their video provider based on price, quality and customer service not based on which one has a lower state sales tax. The bill, sponsored by Judiciary Committee Chairman John Conyers (D-MI) and Rep. Chris Cannon (R-UT), allows states to tax any pay TV service so long as the tax is equal across all providers. DirecTV and Dish Network look forward to working with a growing list of supporters to enact this bipartisan, common sense bill into law this year.”

Currently states including Florida, Kentucky, North Carolina, Ohio, Tennessee and Utah levy video service taxes on satellite television that are significantly higher than those levied on cable television.

Supporters of the bill, including the National Taxpayers Union, have said it will “help ensure that consumers — not the states — pick marketplace winners and losers.”

In a joint statement, satellite TV providers DirecTV and Dish Network said: “Dish Network and DirecTV applaud Chairwoman Sanchez and all the members of the House Judiciary’s Commercial and Administrative Law subcommittee who this morning overwhelmingly approved H.R. 3679, the State Video Tax Fairness Act.

The National Cable & Telecommunications Association (NCTA) has opposed the bill, saying it “would lock-in the unfair burden already shouldered by cable customers in 44 states and the District of Columbia who pay more in state and local taxes and fees than subscribers of satellite (DBS) television service.

“DBS already enjoys preferential tax treatment. Under Section 602 of the 1996 Telecommunications Act, DBS is exempt from having to collect or remit local taxes and fees that cable operators have to pay. The average monthly taxes and fees on cable services is approximately 11 percent (Heartland Institute, May 2007), and almost all states impose higher taxes and fees on cable than DBS,” according to talking points on the NCTA Web site.

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