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SBCA: TV TAX WILL MAKE TELEVISION MORE EXPENSIVE FOR NEW YORKERS IF LAWMAKERS DON’T STOP IT

Seniors, Restaurant & Bar Owners, Rural New Yorkers Hit Particularly Hard; Foreign Language Programming Could Become Unaffordable
 
Dubious Legality of Measure Could Worsen New York’s Cash Crunch

Washington, D.C., February 3, 2009 --  A proposal to tax satellite and cable television will make TV entertainment more expensive for millions if lawmakers do not stop it, according to a Satellite Broadcasting and Communications Association (SBCA) official who testified today at a hearing held by the New York Legislature’s Joint Legislative Budget Committee on Taxes.  
 
Citing the worsening economy, the SBCA’s director of Public Policy and Outreach, Lisa V. McCabe, said the tax would increase the bills of the average satellite and cable household up to 8.75% annually.  And she warned that satellite television subscribers could end up having to pay a higher tax than their friends who have cable.
 
“When times are tough and wallets are thin, TV is the entertainment of last resort for thousands of New Yorkers,” McCabe said.  “We can cut out restaurants, we can rule out plays, movies, lectures, and sporting events as luxuries.  And when we do, we stay at home and click on the TV.  The tax -- $80 a year for most subscribers -- puts average New Yorkers to an untenable choice between a tax they cannot afford to pay and service they cannot afford to lose.”
 
McCabe said seniors on fixed incomes and those who rely on foreign language programming would be hit particularly hard by the TV tax.  “An $80 tax would force seniors to make some tough decisions if they want to continue to have access to their favorite television shows,” McCabe warned. “If you rely on satellite to get the news or the weather in other languages, you’re out of luck if you can’t pay the TV tax.”
 
Rural New Yorkers would also be adversely impacted by the tax since over-the-air programming tends to be more limited in places like Greene County, at the far reaches of the Albany and New York TV markets. McCabe added that the thousands of hotel, bar and restaurant owners in New York who need satellite TV to stay in business would see their costs go up at a time when the economy is forcing them to pinch every last penny.
 
With the federal government’s mandate for all broadcasters to switch to digital signals about to take effect, McCabe said that the TV tax would add to the financial burden many New Yorkers are already experiencing in connection with their televisions. The program the federal government set up to help those who cannot afford digital converter boxes (a device older TV sets need to read digital signals) is out of money.  “These New Yorkers will have three options:  buy a new TV, converter box, or TV subscription.  If you are on a fixed income, buying a new appliance is out of the question.  So the choice is:  buy a TV subscription or watch static,” McCabe said.  
 
McCabe said the courts are likely to strike the TV tax because it violates federal law.  Acknowledging that the tax is vulnerable, the drafters provided for a back-up plan.  But Plan B, McCabe added, is also illegal, because it would unconstitutionally impose a substantially higher state sales tax on satellite TV subscribers than on cable subscribers. As such, McCabe warned that enacting the proposed tax would exacerbate New York's tough fiscal situation, since courts would require the State to refund the illegally collected taxes back to subscribers. Ohio found itself in a similar position because of a similar illegal scheme, and is now on the hook for $200 million in refunds.
 
“It is bad policy to punish consumers with higher taxes for choosing one TV service over another and it is particularly pernicious for many rural New Yorkers who have no choice other than satellite television.” McCabe said.

A copy of McCabe’s testimony can be found at http://www.sbca.com/site_files/NYTaxTestimony.pdf

The Satellite Broadcasting and Communications Association is the national trade organization representing all segments of the satellite industry. It is committed to expanding the utilization of satellite technology for the broadcast delivery of video, audio, data, music, voice, interactive, and broadband services. Additional information can be found at www.sbca.com.