Satellite Companies Sue Massachusetts Over Satellite Tax

Say it discriminates in favor of its cable competition
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DISH and DirecTV are filing suit today in Massachusetts
Superior Court against the state of Massachusetts
over its recent decision to levy a 5% state sales tax on satellite service.

They argue the tax is discriminatory because no similar tax
is levied on cable. "The lower sales tax imposed on cable subscribers
serves only the parochial economic interests of those businesses and deprives
the public of sales tax revenues."

DISH and DirecTV argue that that 5% difference could be
enough to persuade the 275,000 satellite subs in the state to switch to cable,
which already claims 1.9 million. It also points out that the state is forgoing
another $80 million in revenue that it could use in the current economic
crisis.

They say there is no rationale basis for discriminating
between satellite and cable when "the latter imposes far greater demands
on the State for services, infrastructure, easements, and environmental
impact."

They want a declaratory ruling that the tax violates the
Commerce clause (it discriminates against interstate commerce, they argue) and
Equal Protection clause (taxing satellite at a higher rate than cable) of the
Constitution, a permanent injunction against it, and a rebate of the taxes.

The cable industry has pointed out that it already pays real
estate, personal property and other taxes, as well as state regulatory fees. It
also provides services under franchise agreements including carrying PEG
channels and providing service to schools and libraries.

It also pointed to the infrastructure investment it has made
in buildings and networks in the state, an infrastructure the legislature noted
in approving the tax last summer.

"The Legislature ended a special tax exemption for satellite companies that were being subsidized by Massachusetts taxpayers," said Paul Cianelli, president of the New England Cable and Telecommunications Association. "We are confident that the state court will uphold the law and side with taxpayers over a special interest that was not paying its fair share."

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