Cable Ops Push for Uniform Digital Goods/Services Tax Regime

Comcast, Cox, Time Warner join with computer and cell phone companies

By John Eggerton -- Broadcasting & Cable, 5/18/2011 6:49:37 PM

Comcast, Cox and Time Warner have joined with computer and cell phone companies and others to form the Download Fairness Coalition, which will be unveiled Thursday in Washington.

It will push for legislation creating a "national framework" for taxing digital commerce, rather than the current patchwork of overlapping state taxes that can be applied multiple times on the same transaction.

The bills they are backing are the bipartisan Digital Goods and Services Tax Fairness Act proposed in the Senate last week by Ron Wyden (D-Ore.) and John Thune (R-SD) and in the House by Judiciary Chair Lamar Smith (R-TX) and Steve Cohen (D-TN).

The bill prohibits state and local governments from taxing digital goods and services if they do not tax comparable tangible goods. It also prevents multiple state taxes on those goods.

The new coalition will be headed by Sam Whitehorn, a former top Senate Commerce committee staffer.

Rep. Smith introduced multiple tax preemption bills in the last Congress, which cable operators also supported.

Why are cable operators part of the coalition? "Technologies and platforms are moving in that direction where they are in those same kinds of markets ultimately in terms of digital goods and services," Whitehorn told B&C/Multi, "whether it is movies or songs."

Whitehorn says the new bill is slightly different from Smith's bill in the last Congress, primarily by removing three carveouts. The previous bill exempted online health, energy management and educational services from all state and local taxes. The current one does not. Why were those specific segments dropped?

"This was just a cleaner way to look at the marketplace and where the whole digital world is going," he says. In the current bill, "if you are selling a health app or an energy app or a smart grid or an educational app," it is included. That would make sense, since the FCC is expecting more and more of those services to be going online.

Whitehorn said a hearing has been slated for May 23 in the House Judiciary Committee--the one Smith chairs.

Also said to be part of the coalition are Amazon, Apple, Verizon and T-Mobile.