Ohio Satellite TV Users Charge Tax Discrimination

Published February 1, 2009

Ohio’s satellite TV subscribers are fighting against what they consider to be discriminatory treatment in the state’s tax code.

Five years ago Ohio lawmakers approved a special 5.5 percent tax on TV viewers who get their signal from a satellite service. Cable users are completely exempt from the tax. As a result, two neighbors could be enjoying the same TV program, but one would be paying more in taxes because they’re using a satellite dish while the other is relying on cable.

The resulting bill isn’t insignificant—satellite consumers paid more than $100 million in extra taxes between 2003 and 2007, with the total for 2008 expected to add another $40 million.

Lawmaker Pushes Back

Ohio state Rep. Louis Blessing, Jr. (R-Cincinnati) has introduced House Bill 599 to end the state’s discriminatory tax on satellite TV.

Other reformers outside the legislature have gone farther, suggesting a “satellite TV tax refund” on Ohio’s 2009 state income tax returns, similar to the 2007 refund on federal income tax forms for a telephone tax that courts found to have been improperly and excessively billed.

Satellite TV users also are pursuing other avenues for redress. In November 2007 the Franklin County Court of Common Pleas ruled against using government to give one product an artificial competitive advantage over another.

At the federal level, Congress is considering the State Video Tax Fairness Act, which would prohibit discriminatory taxes on similar multichannel video programming products.

Six States Hit Satellites

Ohio is one of six states levying on satellite TV video service taxes significantly higher than those on cable TV or other consumer products. The other states are Florida, Kentucky, North Carolina, Tennessee, and Utah.

Cable providers argue the policy is fair because they pay government “franchise fees” in exchange for public rights of way to lay cable. But satellite TV signal providers note they shoulder heavy burdens, too, by paying billions for FCC licenses and millions in annual fees. The satellite TV tax is a cost other TV viewers don’t have to bear, they note.

Some suggest applying the tax to all TV service providers as a way to bring about parity, but that is unlikely given the cable lobby’s clout in Columbus. That may be a good thing, as levying higher taxes on everyone would turn a debate over tax discrimination into an opportunity to raise taxes further by making sure providers of similar services suffer the misery of equally harsh taxes.

Telecommunication outlets of all varieties have been targets for disproportionate and punitive taxes since the Spanish-American War. Satellite TV is only the latest example, and Ohio taxpayers are at the forefront of the battle to end this unfair tax treatment.

Kristina Rasmussen ([email protected]) is director of government affairs for the National Taxpayers Union, a nonpartisan citizen group that works for lower taxes and smaller government.