State TV Tax Fight Goes To U.S. Supreme Court
Pointing to “protectionism,” a major satellite-television company is asking the U.S. Supreme Court to take up a constitutional challenge to a Florida law that sets different tax rates for cable and satellite TV services.
Dish Network in September filed a 39-page petition in the U.S. Supreme Court, nearly five months after the Florida Supreme Court sided with the state and the cable industry in upholding the law.
The long-running battle focuses on the state's communications-services tax, which is 4.92 percent on the sale of cable services and 9.07 percent on the sale of satellite-TV services. Dish Network contends the different tax rates are a form of protectionism that violates the “dormant” Commerce Clause of the U.S. Constitution, which bars states from discriminating against interstate commerce.
“In particular, it forbids a state from taxing or regulating differently on the basis of where a good is produced or a service is performed,” said the Dish Network petition, posted on the SCOTUSblog website, which closely tracks the U.S. Supreme Court. “That's exactly what the unequal Florida tax does. It puts a heavier duty on pay-TV programming that is assembled and delivered without using massive infrastructure within the state.”
But the Florida Supreme Court, which sided in April with the state Department of Revenue and the Florida Cable Telecommunications Association, rejected the notion that cable was an “in state” interest that was being protected by the law. Justice Peggy Quince wrote, for example, that Florida's largest cable providers are headquartered out of state, as are the satellite companies.
"Cable is not a local, in-state interest any more than satellite,” Quince wrote. “While it may be true that cable employs more Florida residents and uses more local infrastructure to provide its services, the Supreme Court has never found a company to be an in-state interest because it had a greater presence in a state."
The U.S. Supreme Court only agrees to hear a relative handful of the thousands of appeals filed each year. Responses to the Dish Network petition are due Nov. 13, according to a court docket.
(Disclosure: The News Service of Florida has a partnership with the Florida Cable Telecommunications Association for the Capital Dateline news show.)
In the petition, Dish Network argued that the “practical effect of Florida's unequal sales tax is to benefit local economic interests associated with cable,” including state and local government.
“What possessed the state to adopt this unequal excise on competing services? In a word, protectionism,” the petition said. “Though cable and satellite may be interchangeable from the viewer's perspective, they have very different relationships with the local economy.”