When tax reformers began looking for new sources of Georgia revenue last year, they found an easy target in the satellite dishes perched on rooftops across the metro area and state.
Satellite TV doesn't pay sales tax as other communications services providers do. It doesn't pay franchise taxes, either, as cable TV and phone companies do.
State lawmakers are now looking at changing that. They proposed a new 7 percent excise tax on all communications services last week, as part of a 127-page tax overhaul bill. Four percent would go the state and 3 percent back to local governments.
Modeled on a system in place in North Carolina and Virginia, the new tax would replace the patchwork of taxes and fees that now attaches to communication providers, including local sales taxes and franchise fees.
It would earn the state between $190 million and $200 million in new revenue annually, according to backers' estimates.
Backers, including satellite TV's major competitors, said the new tax would level the telecommunications playing field and make pricing more transparent. Satellite companies say the proposal tilts that same playing field, favoring cable customers at satellite customers' expense.
Consumers of a range of communications services will see higher prices.
The proposal would add a first-time 7 percent tax on satellite service and raise the tax on most other communications services, including cable and all but the most basic of cell phone plans. The amounts would depend both on how a consumer bundles services and the local sales tax rate in place now now where a consumer lives.
A Cobb County cell phone bill would rise more than a Fulton County one, because the taxes that would be replaced are lower there.
A bundle that includes land-line phone service would rise less than one without it: Land-line service is the only communications technology that would see taxes and fees cut under HB 385.
Increases would likely be modest -- a few dollars a month at most -- but the change isn't likely to please consumers.
"Why do they need to raise it at all?" asked Sandy Springs resident Robert Greenhalgh, while using an iPhone over lunch this week. He said the state should cut its budget instead. "They get enough of our money."
The new tax has support from some heavy-hitting communications interests, including the state cable TV association and wireless arch-rivals Verizon and AT&T, in addition to the Special Counsel on Tax Reform and Fairness, which recommended the change.
In a statement, Verizon described the status quo: "State and local taxes for both wire-line and wireless services, although ‘local' doesn't really apply in the same way it does for wire-line. Wireless service is taxed on the lowest monthly rate plan, which varies from provider to provider. Cable service is subject to local franchise fees. Satellite service is not taxed."
The bill, AT&T added in its own statement, would make it easier to compare prices and "free Georgia consumers to choose services based on value, not level of taxation."
Industry backers also like a part of the bill that eliminates sales taxes on equipment and material they use in business, which they believe will make it cheaper to expand and upgrade broadband networks.
The Association County Commissioners of Georgia is for the bill, and the Georgia Municipal Association is open to it. Both are watching carefully to make sure the measure can deliver on its promise to make local governments whole.
Satellite companies are fighting it all the way.
Damon Stewart, a spokesman for DIRECTV, said the bill incorrectly equates cable franchise fees with taxes. He said franchise fees are not a tax but rent for the use of public land for running cable.
"This proposal would be a new 7 percent tax on 1.1 million Georgia satellite subscribers," Stewart said. "This new tax is a classic example of the government playing favorites and is patently unfair to a growing industry that employs over 1,000 people in Georgia."
Supporters of the tax say satellite has been protected from taxation for too long and that local franchise fees are a legacy of an era when cable and phone companies had unchallenged monopoly territories.
The current tax code is "designed for the days when you had Ma Bell and a black rotary phone," said David Sjoquist, director of the Fiscal Research Center at Georgia and a member of the tax reform council. "It doesn't make sense anymore."
"They're all competing," said Kelly McCutchen, president of the market-focused Georgia Public Policy Foundation. "You've got cable companies that can provide phone services and the phone company that can provide video. The tax code has not kept up with the advance of technology. This simplifies things."
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