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Bill would add 5 percent to satellite television bills
The 'equalization tax' would mirror the current levy on cable bills in Iowa.
By JASON CLAYWORTH
REGISTER STAFF WRITER
April 12, 2007
47 Comments
A new tax could be in store for Iowa's satellite television users.
Lawmakers are considering a 5 percent "equalization tax" on satellite bills, which would be similar to the 5 percent franchise fee currently added to the bills of many cable customers.
The tax would cost Iowa's estimated 200,000 families that use satellites an extra $2.5 million to $3 million each year, according to information from the Iowa Cable and Telecommunications Association.
Satellite users, such as customers of DirecTV, for years have avoided paying the franchise fee, which has traditionally been viewed as payment to use city-owned rights of way to lay cable lines.
Satellite companies do not typically use rights of way, and - as families make a switch from traditional cable - cities are increasingly seeing their cut of the revenue shrink.
Des Moines, for example, collected more than $1.7 million from the fees in 2002. Last year, the city collected roughly $400,000 less.
Prairie City resident Ed Gillman switched from cable to satellite in 1999. Charging satellite customers an extra tax doesn't make sense, he said.
"All we're getting is a signal from the air," Gillman said. "It has nothing to do with streets, poles, wires or anything else."
Advocates, however, say the tax would create more fair competition. Franchise fees put cable companies at a disadvantage, they say.
"It is not a new tax," said Tom Graves, a lobbyist for the Iowa Cable and Telecommunications Association, which works closely with Mediacom and other cable providers in the state. "It will bring taxes back that have gone away from cities."
Graves told legislators during an Iowa House subcommittee meeting Wednesday that most Iowa cities have franchise fees in place.
House Study Bill 303 would apply only to satellite users who live in cities that have franchise fees on cable bills.
The proposal would make it difficult for satellite companies that offer packages of telephone, video and Internet services, said Todd Schulz, a lobbyist for Newton-based Iowa Telecommunications Services Inc., which offers such packages. He questioned how far the tax would go. Should radio signals, for example, be taxed?
"You're really taxing the air over the cities," he said to lawmakers.
Rep. Geri Huser, a Democrat from Altoona who sits on the House Ways and Means Committee, said Wednesday that she is unsure whether the bill will make its way out of committee. The bill would need House and Senate approval before lawmakers adjourn at the end of the month.
The Senate last month approved Senate File 554, a proposal that allows cable companies to apply for a statewide franchise rather than having to negotiate agreements with individual cities.
Supporters say that proposal would open up competition and lower prices for Iowans, while critics worry local governments would lose revenue.
Bill would add 5 percent to satellite television bills
The 'equalization tax' would mirror the current levy on cable bills in Iowa.
By JASON CLAYWORTH
REGISTER STAFF WRITER
April 12, 2007
47 Comments
A new tax could be in store for Iowa's satellite television users.
Lawmakers are considering a 5 percent "equalization tax" on satellite bills, which would be similar to the 5 percent franchise fee currently added to the bills of many cable customers.
The tax would cost Iowa's estimated 200,000 families that use satellites an extra $2.5 million to $3 million each year, according to information from the Iowa Cable and Telecommunications Association.
Satellite users, such as customers of DirecTV, for years have avoided paying the franchise fee, which has traditionally been viewed as payment to use city-owned rights of way to lay cable lines.
Satellite companies do not typically use rights of way, and - as families make a switch from traditional cable - cities are increasingly seeing their cut of the revenue shrink.
Des Moines, for example, collected more than $1.7 million from the fees in 2002. Last year, the city collected roughly $400,000 less.
Prairie City resident Ed Gillman switched from cable to satellite in 1999. Charging satellite customers an extra tax doesn't make sense, he said.
"All we're getting is a signal from the air," Gillman said. "It has nothing to do with streets, poles, wires or anything else."
Advocates, however, say the tax would create more fair competition. Franchise fees put cable companies at a disadvantage, they say.
"It is not a new tax," said Tom Graves, a lobbyist for the Iowa Cable and Telecommunications Association, which works closely with Mediacom and other cable providers in the state. "It will bring taxes back that have gone away from cities."
Graves told legislators during an Iowa House subcommittee meeting Wednesday that most Iowa cities have franchise fees in place.
House Study Bill 303 would apply only to satellite users who live in cities that have franchise fees on cable bills.
The proposal would make it difficult for satellite companies that offer packages of telephone, video and Internet services, said Todd Schulz, a lobbyist for Newton-based Iowa Telecommunications Services Inc., which offers such packages. He questioned how far the tax would go. Should radio signals, for example, be taxed?
"You're really taxing the air over the cities," he said to lawmakers.
Rep. Geri Huser, a Democrat from Altoona who sits on the House Ways and Means Committee, said Wednesday that she is unsure whether the bill will make its way out of committee. The bill would need House and Senate approval before lawmakers adjourn at the end of the month.
The Senate last month approved Senate File 554, a proposal that allows cable companies to apply for a statewide franchise rather than having to negotiate agreements with individual cities.
Supporters say that proposal would open up competition and lower prices for Iowans, while critics worry local governments would lose revenue.
