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Dish Companies: Satellite Customers Unfairly Penalized

Press Release from McNeely Pigott & Fox, representing Satellite Broadcasting & Communications Association, Dish Network and DirecTV.

Cable Tax Exemption Harms Tennessee Businesses

NASHVILLE, Tenn. – The state’s approximately 800,000 satellite customers are being unfairly penalized, simply because they chose satellite over cable, say representatives of the state’s satellite retailers.

For the past 11 years, cable companies and their customers have been exempt from paying sales taxes on the first $15 of their monthly cable bills. That tax exemption is not available to satellite customers – approximately one-third of the state’s population – who must pay taxes on their entire bill. The tax also harms satellite dealers who are competing against cable for customers.

Gov. Phil Bredesen’s budget proposal calls for eliminating cable’s tax exemption, which would produce nearly $21 million in badly needed new revenue for law enforcement, higher education and agriculture. Without the new revenue, critical services will be eliminated. The state’s district attorneys estimate that at least 17 prosecutors, 20 victim witness coordinators and 25 other law enforcement positions could be cut if new revenue is not found.

“The tax exemption for cable companies is unfair and stifles competition,” said Joe Widoff, executive director of the Satellite Broadcasting and Communications Association. “Our customers, many of whom live in rural areas and do not have access to cable, are suffering the consequences of a mistake made by the legislature 11 years ago. This inequality needs to be stopped this year.”

If the tax exemption were eliminated, consumers would pay a mere $1.35 extra per month on their cable bill. That amount is equal to the price of a soft drink, something many Tennesseans purchase on a daily basis.

The state’s satellite companies have filed a lawsuit against the state of Tennessee because the state unfairly penalizes their customers with a tax that cable customers don’t pay. If the state loses the lawsuit, and the claim is fully awarded, taxpayers may be on the hook for nearly $100 million in tax refunds to satellite subscribers.

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