In 2003, the Ohio General Assembly approved a 5 percent sales tax on satellite-TV services. A similar tax was to be levied on cable TV services; however, cable operators were able to apply enough pressure on lawmakers to get the tax removed. This left the 6 percent tax to be levied exclusively on satellite-TV companies. Unsurprisingly, EchoStar Satellite Corporation and DirecTV Incorporated took the state to court, claiming the tax was discriminatory and unconstitutional. Ed Kozelek, Executive Vice President and Legal Counsel for the Ohio Cable Telecommunications Association, wrote off the legal efforts, saying they were “satellite's last-ditch efforts to maintain its current advantage over the cable industry." Nevertheless, Judge Daniel Hogan of the Franklin County Common Pleas court ruled in favor of the satellite-TV companies, effectively setting a precedent in favor of equitable tax treatment for all video providers.

The National Taxpayers Union applauds Judge Hogan for this principled ruling - and this is why: companies don’t pay taxes, customers do. It’s easy for legislators to levy discriminatory taxes under the guise that they are only taking money from the evil corporation, but the picture changes somewhat when one realizes this isn’t the case. We have no vested interest in the success of any satellite or cable company, but we do have a vested interest in the fair treatment of each individual taxpayer. In this case, it was those individuals who chose to have satellite-TV who were unfairly targeted by the government.

Despite the legal victory, we don’t expect to see any concessions by the state on this matter. After all, it is estimated that Ohio collected around $26 million from this tax in 2005 alone. That kind of cash is worth fighting for, and state officials are confident it’s a fight they will win. Ohio Department of Taxation spokesman Mike McKinney, citing similar cases in North Carolina and Kentucky, says he is “confident about getting the decision reversed.” Nonetheless, we are equally confident in our ability to stand up for the fair treatment of the taxpayer.

NTU is stepping it up a notch by taking the fight all the way to the US Congress. We have sent legislators an open letter urging their support of H.R. 3679, the State Video Tax Fairness Act. This piece of legislation, sponsored by Representative John Conyers (D-MI), would put an end to this inequitable tax once and for all. However, we need co-sponsors! So give us a hand and call your elected officials when you finish reading this. We’ll be sure to keep you updated on any developments.