Originally Posted Online: Nov. 14, 2012, 6:04 pm
Last Updated: Nov. 15, 2012, 9:50 am
Satellite TV companies say Illinois tax plan would raise customers' bills
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By Eric Timmons, firstname.lastname@example.org
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In May the Illinois Senate narrowly approved a bill to impose a tax on satellite TV companies. The proposal, sponsored by Senate president John Cullerton, D-Chicago, would tax 5 percent of the gross revenue of satellite TV companies.
Satellite TV companies are angry about a proposed new tax they say could add $55 a year to an average customer's bill.
In May, the Illinois Senate narrowly approved a bill to impose the tax, which supporters say would generate an estimated $75 million for the state's education assistance fund.
The proposal, sponsored by Senate president John Cullerton, D-Chicago, would tax 5 percent of the gross revenue of satellite TV companies.
Lawmakers in the Illinois House could vote on the proposed tax when they meet for a veto session later this month, or during a lame duck session in January.
"The cable industry pays 5 percent just for doing business in their respective host communities," said Joe Handley, president of theCable Television & Communications Association of Illinois. "Satellite pays nothing."
Cable companies pay franchise fees to municipalities of up to 5 percent of their revenue in a particular town or city. Satellite companies do not have to pay franchise fees.
If approved, the 5 percent tax likely would be passed on to customers and could add $55 a year to an average user's bill, opponents say. There are roughly 1.3 million satellite TV customers in Illinois, about one third of the market.
Officials at DirectTV and Dish, the two main satellite TV providers,see the tax as an effort by big cable companies such as Comcast to put them at a competitive disadvantage.
They reject the argument from cable companies that the tax would level the playing field.
"It's akin to airline passengers paying to lay railroad tracks," said Andrew Reinsdorf, senior vice president for government affairs for DirectTV. "We don't think it makes sense."
Satellite companies don't need access to streets and driveways to connect cables to customers, a reason cable companies have to negotiate franchise fees, opponents of the proposed tax said.
State Sen. Mike Jacobs, D-East Moline, and State Sen. Darin LaHood, R-Dunlap, voted against the tax when it came before the senate and passed on 30-27 vote.
"I don't think government should be in the business of deciding who should have an advantage in business," Sen. Jacobs said.
In the House, State Rep. Pat Verschoore, D-Milan, has yet to take a position on the satellite tax.
"I have had a lot of people that have Dish emailing and calling me to ask me to vote against it," he said. "But I want to take a close look at the bill before I make a firm commitment."
After a similar tax was introduced in Masschusetts, the number of satellite subscribers went down, which also cut into that state's projected revenue from the tax, Mr. Reinsdorf said.
State Rep. Rich Morthland, R-Cordova, was unavailable for comment.
The bill isHB 5440.