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Utah Legislature: Cable customers could get small break

Published February 6, 2012 5:20 pm

SB112 • Measure would rebate tax in a plan fought by satellite providers.
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Cable TV customers could get a break of about $3 to $4 on their monthly bill, thanks to a proposed $6.6 million tax rebate that the sponsor said is meant to put cable and satellite providers on equal footing.

Sen. Wayne Niederhauser, R-Sandy, said the goal of SB112 is to provide parity between the fees paid by cable providers and their satellite competitors, which are currently exempt from paying local franchise fees.

"We shouldn't be, as government, deciding winners and losers," Niederhauser said. "Let them decide. Let them compete, the satellite and cable companies, based on their way of distribution."

But the issue has fueled a torrid lobbying barrage and generated scores of emails to legislators — most of them form letters encouraged by the satellite providers, claiming the change will raise the cost of satellite service.

Niederhauser said that's not the case. Extending the rebate to cable customers will mean cable and satellite customers will each end up paying a 6.5 percent tax, rather than cable customers paying several percentages more.

"This is all about satellite trying to preserve their special tax break and cable having to pay a higher tax," said Sen. Curt Bramble, R-Provo. "That's why the satellite folks are arguing so passionately. They want a statutory exemption."

Meanwhile, Comcast, the state's largest cable company, contributed nearly $60,000 to legislators' campaign accounts last year. And the Utah Cable Telecommunications Association gave another $15,500 to lawmakers.

About a decade ago, the Legislature began allowing local governments to charge a franchise fee of up to 5 percent for both cable and satellite companies. But the satellite companies convinced Congress to exempt them from local franchise fees, meaning that for years the cable customers have essentially been paying a higher tax.

In 2007, the Legislature decided to give a rebate to cable customers to offset half the franchise tax. Niederhauser's bill would now double that rebate, meaning the entire franchise fee would be offset and customers on satellite and cable will pay the same rate.

Niederhauser said that the Legislature considered repealing the franchise fee, but that it is a source of income for local governments and its loss would have created a hardship for them.

The bill states that the cable companies have to pass the savings on to customers.

Sen. Pat Jones, D-Holladay, said she was concerned about the $6.6 million it would cost the state to extend the rebate and the "continued erosion of our general fund," which pays for human services and "many services our citizens enjoy."

The bill was given preliminary approval on a 24-5 vote Monday. If it passes on a final Senate vote later this week, it will go to the House for consideration.