Utah state lawmakers are considering eliminating a new tax on direct-broadcast satellite, cable and Internet service less than seven months after instituting the levy.
Legislation to repeal the tax is now before the state Senate, which has until the current session expires in early March to decide whether to ax it. The House of Representatives voted 71-3 to repeal the tax last week.
The tax was approved in the waning days of the 2003 session because lawmakers wanted the $20 million in revenue to help balance the state’s budget. Since then, state finances have improved greatly, thanks to an unexpected $100 million in federal funds.
Further weakening support for the tax is a subsequent ruling by state officials that led many to believe that the tax unfairly slammed cable companies. The Utah Tax Commission ruled that the portion designated for Utah municipalities was illegal because federal law prohibits local governments from taxing satellite companies. The state portion of the satellite tax remains legal.
Senate approval of repeal is no sure thing. Some senators are postponing the vote until they are satisfied that the state can balance the budget without the money. Roughly 500,000 Utah households are currently subject to the tax, which adds about $3 to monthly bills of subscribers with a $40 package.