DearLegislator:
On behalf of the National TaxpayersUnion’s 4,000 members in Alabama, I urge you to oppose any new or heavier taxburdens that might result from the recommendations of the Alabama Video Tax andFee Study Committee. While most would agree that Alabama’s video tax regimeshould be modernized, such an effort should not serve as a pretext for raisingrevenue or discriminating against a particular industry. Government has for toolong stretched its tax and regulatory powers to pick winners, ultimatelyleaving consumers as the ultimate losers.
SJR 97, the Study Committee’sauthorizing resolution, gives the distinct impression it may not focus solelyon reducing burdens facing cable customers, but might instead seek to place newtaxes on satellite television. Statements such as “at least 10 states haveenacted legislation that would close the loophole created by the federalgovernment and create tax and fee parity among subscription video serviceproviders and users,” do not reflect a prudent approach to changing existinglaw or respecting the diversity of business models in the video servicesindustry.
A tax on satellite television would punishover 700,000 Alabama households simply for choosing satellite over other typesof service. Furthermore, satellite television can be the only option forAlabama families who live in the rural parts of the state where cable andbroadcast services are not readily available.
Misguided arguments about “closingloopholes” aside, each provider’s unique mode of business entails certainspecific costs as a precondition of delivering their service. Cable televisionservice is subject to “franchise fees” paid in exchange for publicrights-of-way to lay cable. This cost is mirrored by satellite providers’ needto competitively bid for the use of federally owned spectrum and launchspacecraft to transmit their signals.
Unfortunately,local cable franchise fees are often excessive, with some experts estimatingthat as little as 10 percent of proceeds go toward maintaining public propertywhile the other 90 percent props up bloated municipal budgets. There is littlejustification, other than pumping up tax revenues, for charging such franchisefees as a percentage of sales rather than, for example, as flat per-linemaintenance fees. NTU is committed to providing fee relief and will readilywork with the State of Alabama and local governments to review these policies,but they cannot be used as a justification for imposing discriminatorystatewide taxes on customers of other services in the name of a distortedattempt at “fairness”.
Such situationsare precisely why Alabama’s leaders should look to systemic reforms thatprovide relief, not added expenses, to consumers. Telecommunications are a keyelement in restoring a vigorous economy, and should not beheld hostage to revenue-raising ambitions.
Sincerely,
Brent MeadStateGovernment Affairs Manager