Satellite TV Tax Defeated; CSA and Coalition Opposed with Vigor

SACRAMENTO — Satellite television viewers aren’t going to be burdened with resolving the state’s financial woes, at least for this year. That is how the California Space Authority feels about the situation after having worked to defeat a newly proposed state tax on direct broadcast satellite (DBS) television services.

State lawmakers finally agreed to a $99 billion budget deal over the Labor Day Weekend. Earlier versions of the budget package included a 5% tax on satellite television service. This language remained in the proposal until the final hours of debate.

“The idea for this tax was initiated by cable operators who argue that a state tax on satellite services would balance the costs they incur due to locally imposed franchise fees and utility user taxes,” stated Robert Davis, President and CEO of the California Space Authority. “Obviously, we didn’t agree with the theory that satellite delivery systems should be equated to terrestrial delivery methods. Franchise fees and utility user taxes are a unique business expense of ground-based delivery while direct-to-home services use technologies that avoid such impacts.”

The California Space Authority worked to put together an impressive array of coalition members and interested space enterprise stakeholders. Consequently, legislators and their staffers were showered with ample amounts of information and argumentation. The coalition included: DirecTV, EchoStar, the CA Taxpayers Association, Howard Jarvis Taxpayers’ Association, CA Chamber of Commerce, Lockheed Martin, The Boeing Company, Aerojet, Space Systems/Loral, Orbital Sciences Corp., American Electronics Association, Quintron Systems, SpaceDev, Spaceport Systems International, the Satellite Broadcasting and Communications Association, and the Satellite Industries Association. They argued that this tax proposal wasn’t about solving the state’s financial situation, but rather about making satellite television services noncompetitive with that offered by California’s cable operators.

“While we have beaten back this tax for the time being, we expect it to be resurrected next year,” concluded Mr. Davis. “While this is a turf battle for market share, the revenue argument is attractive to the Legislature during these tough financial times so CSA remains on the alert.”

See SB 1849.