Dear Legislator:
On
behalf of the National Taxpayers Union’s 7,700 members in Indiana, I urge you
to oppose House Bill 1382, which imposes a new 5 percent tax on satellite
television. This tax is a punitive levy on satellite television customers,
which will increase costs for many households, limit entertainment choices, and
do nothing to improve Indiana’s fragile economic recovery.
A
tax on satellite television would punish 800,000 Indiana 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 Indiana 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 business 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, 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 lowering those
inflated charges, not through raising taxes on satellite customers.
Indiana’s
cumulative economic performance is ranked fourth-worst in the nation, according
to the American Legislative Exchange Council. This alone ought to deter
policymakers from raising taxes at a point where Indiana may see a turnaround,
but timing aside, such an arbitrary tax hike on one sector of
telecommunications is not smart policy. Instead, we urge you to enact reductions
in taxes for all of your citizens, regardless of which
television, telephone, and Internet service they choose.
Telecommunications
will be a key element in restoring a productive and vigorous economy.
Lightening or at least not adding to the tax burden for those who purchase
these services should be a priority. We look forward to working with you in
drafting such legislation, which would benefits all the consumers of your
state.
Indiana’s
tax code could use serious reform. But reform should not include adding to the already
complicated tax burden by imposing a new tax on satellite television.
Therefore, our members hope you will reject any proposal to do so, and they
stand ready to support the more positive steps outlined above.
Sincerely,
John
Stephenson
State
Government Affairs Manager
CC: Governor Mitch Daniels
Letter
