TCA SUPPORTS HB 1900 TO GIVE TAX BREAK TO OVER 5 MILLION TEXAS FAMILIES

| April 01, 2013 | |

FOR IMMEDIATE RELEASE
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TCA SUPPORTS HB 1900 TO GIVE TAX BREAK TO OVER 5 MILLION TEXAS FAMILIES

15.3 million Texans impacted by relief on some of the highest telecom taxes in the nation

The Texas Cable Association (TCA) on Monday testified in the House Ways and Means Committee in support of a bill that would give 5.5 million Texas cable and other video subscribers a break on their video taxes – taxes that satellite customers don’t pay.

HB 1900 by Rep. Craig Eiland (D-Galveston) would lower monthly cable bills by providing direct, ongoing tax relief impacting 15.3 million Texans, who pay some of the highest telecommunications taxes in the nation. Sen. Craig Estes (R-Wichita Falls) is carrying companion bill Senate Bill 1465.

“We are not talking about a tax cut for business,” said James LeBas, a tax consultant who testified on behalf of TCA. “Cable and satellite companies don’t pay these taxes. They collect these taxes from their customers every month with their bill. Reducing the tax on video services directly impacts Texas consumers. This may be the biggest consumer tax cut proposal of the 83rd session.”

Under HB 1900, customers of cable and other terrestrial video providers (AT&T U-verse, Verizon, FiOS, Grande and others) would not have to pay the state’s 6.25 percent sales tax on the first $75 of the monthly bill. These customers now pay about 14.5 percent in taxes on their monthly bills; in addition to the state sales tax, they also pay up to 8.25 percent in local sales taxes and franchise fees.

By contrast, Texans who get their video through satellite pay only the 6.25 percent state sales tax, under a federal law passed almost 20 years ago intended to help then-fledgling satellite companies. Today, this is a huge advantage for what are now Fortune 200 companies with millions of customers in Texas and that make billions of dollars each year, own assets across the country and employ thousands.

“It’s comparable to having the pizza guy charge you double the tax rate because he drove to your house in a Chevy rather than a Ford,” LeBas testified. “It’s the same pizza, and in the case of video service, it’s the same HBO. A double tax based on a delivery mechanism can’t really be justified.”

The proposed state sales tax exemption would generate more than three times the tax relief provided by the state’s three-day sales tax holiday and is similar to one that exempts the first $25 in monthly Internet charges from state sales tax.

“When video service providers compete on a level playing field, consumers are able to choose the service provider based on who best delivers value and quality service – without regard to the amount of taxes they have to pay,” LeBas said.

“TCA respectfully requests that Texas modernize its video tax and fee regime by lowering the burden on cable and telecom subscribers, giving video service customers a more tax-neutral choice and directly impacting 15.3 million Texans.”

In addition to TCA, testimony Monday included Tom Giovanetti, president of the Institute for Policy Innovation (IPI).

“We believe it’s important for Texas to adjust its tax policies so that like video services are taxed alike, so that Texas consumers are not having their choices distorted by distorted tax policies,” Giovanetti said.

HB 1900 also is supported by Americans for Tax Reform and the Houston Area Urban League.

HB 1900 has gained widespread, bipartisan support. In addition to Eiland, HB 1900 joint authors are Ways and Means Committee Chairman Harvey Hilderbran (R-Kerrville), Carol Alvarado (D-Houston), Tim Kleinschmidt (R-Lexington) and Geanie Morrison (R-Victoria).

Listed co-authors are Reps. Travis Clardy (R-Nacogdoches), Allen Fletcher (R-Tomball), Dan Flynn (R-Van), Lance Gooden (R-Terrell), Patricia Harless (R-Spring), Borris Miles (D-Houston), Poncho Nevárez (D-Eagle Pass), Eddie Rodriguez (D-Austin), Senfronia Thompson (D-Houston), Jason Villalba (R-Dallas) and Armando Walle (D-Houston).

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TCA (www.txcable.com) has been the primary trade organization for cable operators in Texas since 1960. Members include Allegiance Communications, Cable One, Charter Communications, Comcast, Mediastream, Suddenlink Communications and Time Warner Cable. Follow TCA’s activities on Facebook (www.facebook.com/texascable) and Twitter (www.twitter.com/texascable).