It doesn’t violate the no-new-taxes pledge a majority of Republican House members took, but subscribers to satellite TV may not appreciate that distinction when their bill goes up if legislators adopt a tax-swap proposal on Tuesday. On the other hand, small-business owners will be pleased.
Under current law, cable and satellite video services are taxed differently. Why? It has do mostly with the fact that cable companies utilize the right of way to lay cable, while satellite zaps images to a dish. Basically, a $100 bill from cable will end up being more expensive, when taxes are add, than a $100 bill from the satellite guys.
The cable guys want a “level playing field.” In other words, they don’t want the same $100 bill from cable to be more expensive than the one from satellite. In Austin-speak, that always means “raise the other guys’ taxes.”
(Somehow, cutting taxes never enters the level-playing-field equation.)
Cable providers argue that satellite providers have a certain advantage due to the state’s franchise fee and local sales tax being applied to them but not satellite. However, a better course of action would be to lower taxes on cable providers, not to impose them on satellite providers.
Don’t count on that happening.
The best one can hope for is the scheme being floated on the House floor Tuesday that would equalize (at the higher cable rate) the taxes consumers pay for cable and satellite.
But rather than those revenues flowing into general funds to be blown on growing government, the proposal would see the excess dollars used to make permanent the small-business exemption to the inefficient and hated Gross Margins Tax. Anything left over would then flow to the property tax relief fund.
Because this would be a tax swap, we won’t score the vote or consider it a violation of the Taxpayer Pledge.
As with any pure tax swap, legislators should carefully consider who they make happy and who they anger. For some voters, this will be viewed a tax hike. For others, it’ll be a tax cut.
Legislators should be always cautious about letting tax policy be a place where competitors punish each other based on the comparative strength of their lobby teams.
Andrew Kerr is the Executive Director of Empower Texans / Texans for Fiscal Responsibility
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