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Satellite television tax

tv taxIn the state of Ohio, a battle is brewing between satellite and cable television providers.  But it is not about channels or service.  It is about how state governments are giving cable companies an unfair competitive edge, a leg up on the satellite television industry.  The preferential treatment that cable customers are receiving is claimed to be unconstitutional.  Specifically, the battle comes down to the extra tax that satellite customers have to pay where cable customers do not (or are taxedat a lower level).  Along with Ohio, lawsuits have also been filed in Florida, Kentucky, North Carolina, and Tennessee.

Ohio’s 6% tax on satellite customers is “levying different tax burdens in a way that helps in-state business activity at the expense of out-of-state activity.”  This practice violates the commerce clause, interfering with the free flow of commerce itself.  Ohio’s tax might seem high, but be thankful that you’re not in Florida, where the tax is an absurd 10.9%.  This is 4.1% higher than cable subscribers.  In Tennessee, cable customers pay nothing on the first $15 of their bill while satellite subscribers pay tax on their entire bill.

To be absolutely truthful, I had no idea that there was an extra tax on satellite subscriptions.  From an economical perspective, they are providing different ways to bring people entertainment.  That’s like saying apples grown in Washington should be taxed more than one grown in Colorado because Washington is the state of apples.  It’s the same apple.  Sure, DISH and Direct might provide more channels and you have to factor in that they have satellites orbiting in space.  But that is a cost incurred and paid by the company via the higher pricing schemes of subscriptions.  It will be interesting to see where this goes in the long run.  Cable lawyers are saying this a futile effort while lawyers for the satellite subscribers say that this is unfair.  I suppose only time will tell but this certainly makes you think twice about getting a $100 per month satellite subscription taxed at 10%.

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