TALLAHASSEE, Fla. – The future of a tax on your cellphones, satellite and cable TV services is in question. The case pits satellite providers against cable companies. Billions of dollars are at stake in state tax revenue.
The tax brings in just over $2 billion a year for the state. No court in any other state has found the tax unfair or unconstitutional.
Direct TV and other satellite subscribers pay the state about 11.5 percent each month in what is known as the communications services tax. Cable pays 40 percent less, but cable also pays local governments a fee to run their wires along and under the street.
In a case that has made it to the state supreme court, the Department of Revenue acknowledged the higher satellite tax was an attempt to tax both satellite and cable at the same rate.
“In every year examined in this case, satellite providers enjoyed a tax advantage over their pay TV competitor, cable,” said Jonathan Williams, with the Department of Revenue.
But Direct TV’s attorney said the company doesn’t need the poles and wires and the city or state right away to deliver its product, making the higher satellite fee unconstitutional.
“If the Legislature said, 'We’re gonna tax bread at 5 percent if you bake the bread in the state, and we’re gonna tax at 10 percent if it was baked outside the state,' that would violate the dormant commerce clause," Direct TV's attorney, Erick Shumsky, said.
One Justice worried outlaid about the impact on consumers.
“Like I said, in the end we’re really talking about customers," said Barbara Pariente, with the Supreme Court Justice. "They’re the ones who are going to get screwed or helped depending on what goes on here.”
Attorneys on both sides looked equally worried about the outcome. They may have to wait months for the court to decide.