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An Open Letter to the Illinois General Assembly: Oppose Satellite Tax Hike Schemes!

May 31, 2012

Dear Legislator:

On behalf of the National Taxpayers Union’s 14,000 members in Illinois, I urge you to reject any scheme to raise taxes on satellite television subscribers. Last year, the state enacted an enormous multi-billion-dollar income tax increase. Last week, lawmakers added a $350 million tobacco tax hike to the heap. Now the state is targeting satellite television customers with a new 5 percent tax, a policy that will increase prices, limit entertainment choices, and do little to solve Illinois’ chronic budget crises.

A tax on satellite television would punish hundreds of thousands of Illinois households simply for choosing satellite over other types of service. The government should not be in the business of making personal decisions for consumers, especially by dictating or influencing such choices through onerous tax policies. Furthermore, satellite television can be the only option for Illinois families who live in the rural parts of the state where cable and broadcast services are not readily available.

Some argue that this new tax is warranted in order to “level the playing field” because the cable television industry has paid “franchise fees” in exchange for rights-of-way to lay cable. But such fees are supposed to reflect a cost of doing business – rent for use of public property – and one that is mirrored by satellite providers’ need to competitively bid for the use of federally owned spectrum over which they transmit their signals. In truth, whether paying for cable-maintenance trucks, transmission towers, or satellite fleets in space, each provider’s unique business model entails certain specific costs as a precondition of getting their service into homes and businesses. The franchise fee negotiation process is not infallible, and there are likely many instances where cable providers are paying too much to local governments. That is precisely why the path to tax fairness and neutrality is through working to lower those inflated charges, not through raising taxes on satellite customers.

Moreover, increasing taxes yet again will not solve Illinois’ persistent overspending problem. Despite all the rhetoric about “belt tightening,” the state could end up with a budget that spends a half-billion dollars more than last year. Instead of reducing expenditures, Springfield has been busy boosting them while shaking down taxpayers to cover the difference. Companies and individuals are fleeing the Land of Lincoln for good reason: given the inhospitable tax climate, they know it is only a matter of time before they too are left out in the cold with their finances in tatters. Meanwhile, dollars lost in Illinois are dollars gained by neighbors in other states to help them pay for their schools and infrastructure.

Illinois must put an end to the perennial process of targeting groups for higher taxation. Last year it was certain wage earners. Last week it was smokers. Today it is satellite subscribers. This destructive attitude could cause real damage to Illinois’ already-struggling economy. It is long past due for leaders to recognize fiscal reality, beginning with ruling out tax hikes on satellite television customers.


     Andrew Moylan
     Vice President of Government Affairs