For the most part, the Utah Legislature has spent very little time focusing on telecommunications issues. From my stance, that’s usually a good thing as when they focus on the sector, it is almost always to promote an anti-municipal telecom bill. This year, however, brings a bill worth opposing. SB112, sponsored by my own Senator, Wayne Neiderhauser, seeks to cut the state excise tax rate for cable television without making any adjustments for satellite providers.
Sen. Neiderhauser explains the rationale behind the bill: cable subscribers pay more taxes because of franchise fees, so the excise tax needs to be reduced so that the total of excise tax and franchise fees is equal between the two platforms. This, however, is an entirely illogical basis for providing the discount. Franchise fees are paid to a municipal government as compensation for accessing right-of-way. This includes being able to tear up city streets and erect poles in order to deploy this infrastructure. It has no relationship or bearing upon the state excise tax.
The end effect of this bill is to give cable television providers an unfair advantage in the tax system, enjoying a much higher benefit for the same level of taxation. If you want to cut taxes, that’s fine, but doing so in such a manner as to create a greater inequity in the tax structure is absurd. I encourage you to write your legislator to ask them to oppose SB112 as currently written.