Dear Legislator:
Onbehalf of the National Taxpayers Union’s 7,700 members in Indiana, I urge youto oppose House Bill 1382, which imposes a new 5 percent tax on satellitetelevision. This tax is a punitive levy on satellite television customers,which will increase costs for many households, limit entertainment choices, anddo nothing to improve Indiana’s fragile economic recovery.
Atax on satellite television would punish 800,000 Indiana households simply forchoosing satellite over other types of service. The government should not be inthe business of making personal decisions for consumers, especially bydictating or influencing such choices through onerous tax policies. Furthermore,satellite television can be the only option for Indiana families who live inthe rural parts of the state where cable and broadcast services are not readilyavailable.
Someargue that this new tax is warranted in order to level the business playingfield because the cable television industry has paid “franchise fees” inexchange for rights-of-way to lay cable. But such fees are supposed to reflecta cost of doing business – rent for use of public property – and one that is mirroredby satellite providers’ need to competitively bid for the use of federallyowned spectrum over which they transmit their signals. In truth, whether payingfor cable-maintenance trucks, transmission towers, or satellite fleets, eachprovider’s unique business model entails certain specific costs as aprecondition of getting their service into homes and businesses. The franchisefee negotiation process is not infallible, and there are likely many instanceswhere cable providers are paying too much to local governments. That isprecisely why the path to tax fairness and neutrality is through lowering thoseinflated charges, not through raising taxes on satellite customers.
Indiana’scumulative economic performance is ranked fourth-worst in the nation, accordingto the American Legislative Exchange Council. This alone ought to deterpolicymakers from raising taxes at a point where Indiana may see a turnaround,but timing aside, such an arbitrary tax hike on one sector oftelecommunications is not smart policy. Instead, we urge you to enact reductionsin taxes for all of your citizens, regardless of whichtelevision, telephone, and Internet service they choose.
Telecommunicationswill be a key element in restoring a productive and vigorous economy.Lightening or at least not adding to the tax burden for those who purchasethese services should be a priority. We look forward to working with you indrafting such legislation, which would benefits all the consumers of yourstate.
Indiana’stax code could use serious reform. But reform should not include adding to the alreadycomplicated tax burden by imposing a new tax on satellite television.Therefore, our members hope you will reject any proposal to do so, and theystand ready to support the more positive steps outlined above.
Sincerely,
JohnStephenson
StateGovernment Affairs Manager
CC: Governor Mitch Daniels