The state of Ohio levied a 5.5% tax on satellite TV service. I don’t live in Ohio, but I suspect – if my experience is any indication – that this tax is something that is passed along to customers. As a consequence, customers likely saw their satellite television bill go up in 2003 when the Ohio legislature approved the new measure.

Although the new tax likely hit Ohio satellite customers in the pocketbook, cable TV subscribers were bypassed since the new tax was not imposed on cable operators. Needless to say, that was something that did not sit well with DISH and DirecTV but likely put smiles on the faces of cable executives who operate in Ohio.

The new tax law was challenged in court by DISH Network and DirecTV who initially met with success when a Franklin County court ruled in their favor, but an appeal eventually landed the case in front of the Ohio Supreme Court where the satellite operators’ luck ran out.

The court ruled 5-2 that the tax did not “discriminate because satellite and cable companies deliver TV through different means.” I think an appropriate action to that statement might be: “Huh?”

The court further stated that, “’The Ohio General Assembly imposed a sales tax that makes no distinction between local and interstate commerce, but rather distinguishes based on the mode of distributing television programming.” At the risk of sounding a bit redundant: “Huh?”

OK, so here’s what I’m getting out of this: You have two competing services; cable TV and satellite TV. Again, I do not live in Ohio, but I don’t think it’s a stretch to assume that some of the companies operating in Ohio are not based in Ohio. I know that DISH Network is based in Colorado and it appears that DirecTV us based in California.

Since cable TV and satellite TV are offering essentially the same service to the end-user, the satellite companies naturally felt singled out and discriminated against by the the new tax and sought to even things up in court.

The Ohio Supreme Court decided to maintain the status quo based on a decision regarding how the competing services broadcast their programming. That’s an interesting decision, if not a bit odd, but who among us mere citizens can question the unbiased opinion of a Supreme Court decision?

Although the Ohio Supreme Court’s explanation of their ruling may seem a bit lopsided to some of us, the state’s Attorney General, who was charged with defending the tax in court delivered the best punch-line when he was quoted as saying that his victory, “levels the playing field” in the subscriber TV market and ”recognizes and preserves the state’s ability to enact reasonable and fair taxes.”

Let’s see. We pay a tax on our satellite TV service, a tax on our telephone service, a tax on our gasoline, a tax on just about anything else we buy (here in New Hampshire we have no sales or income tax which is nice, but believe me, they make up for it with high property taxes!) or the income we earn and fat cats like Ohio’s Attorney General (can you even get elected or appointed to an office like that if you’re not wealthy?) pats himself on the back for defending a “reasonable and fair” tax on people who just want to watch TV?

Please Mr. Ohio Attorney General, I’d love to hear your definition of “reasonable and fair.” Furthermore, with all the taxes we pay, why is it that our Federal Government and most state governments are going broke? I’d love to hear him defend that in court.

By the way, the new tax has raked in a reported $44 million since it was imposed, but I’m sure that had nothing to do with the recent ruling.

DISH Network and DirecTV Lose in Ohio Court Ruling

It appears that the top satellite TV providers are not about to take this move lying down. In a rare spirit of cooperation, DISH Network and DirecTV have joined to file suit against Massachusetts, calling the new 5% tax “discriminatory.”

The state does impose a tax on cable TV companies and probably other utilities as well, since their lines have to be routed along streets and roads that are considered public property. The satellite companies believe ” and I agree ” that since they are not making use of public property, there are no grounds for the state to impose such a tax.

If the state of Massachusetts is going to start taxing the electromagnetic spectrum, they better figure out a way to start taxing people who watch or listen to any broadcast that is not carried by wires. Perhaps that can add a little bit onto their “excise tax” that all owners of motor vehicles have to pay (at least when I lived there) if the vehicle in question is equipped with a radio!

Apparently, greedy politicians in Florida, Ohio and Tennessee have imposed similar taxes on their residents. Legal action against those states is pending.

Hopefully, the courts will see the flawed logic behind these taxes and abolish them.

I suppose this is what we should expect from politicians when the economy tanks. People are losing their jobs and their homes and they decide to raise taxes. That will be a big help for a lot of struggling families, I’m sure.

DISH Network and DirecTV Protest Massachusetts Money Grab

Cable company customers in California (and many other states) are required to pay a tax as part of their service, which is due to the fact that delivering cable programming to customers involves stringing wires on telephone polls or underground, which involves the use of public property, including streets.

The satellite companies, who do not encroach on public property in order to deliver programming to their customers, say that taxing them does not make sense. They do not depend on access to public property. Seems like a pretty logical argument to me.

The big cable companies do not let logic stand in their way, however, and I’m sure the big donations they have made to various legislators has no connection to their efforts to tax their competitors. Campaign contributions of $340,000 were handed out by the “cable association” in California between January, 2008 and June 30. In addition, three of the big cable companies, Comcast, Time-Warner and Cox made nearly $1 million in campaign contributions during that time.

Kind of looks like the cable industry was trying very hard to make friends in the right places.

The cable companies claim the new tax on satellite service would help to “level the playing field.” Well, that’s a pretty bogus argument when you consider the fact that the cable companies can also offer high-speed internet and telephone service in addition to cable TV. The satellite companies cannot offer those services without partnering with other companies like AT&T, which once had a partnership with DISH Network.

It appears to me that the extra services that the cable TV companies are able to offer make for a significant advantage when compared to their satellite rivals. Still, new customers continue to sign up for satellite service.

To some of us, a tax on satellite service seems ludicrous. Still, some states have already approved these new taxes. Massachusetts, a state that never met a tax it didn’t like, has already done it. Other states are considering it as well. Hopefully, the people of California will be able to put a stop this money-grab.

See the original story on the L.A. Times for more information.

Cable Companies Grease Political Palms To Push Satellite Tax In California