Is there a law against the 5% fee?
Yes there is, The Equal Protection Clauses of the U.S. Constitution says that states such as Massachusetts cannot discriminate against one company that shares a common purpose as another company who provides similar service. But yet somehow only satellite TV subscribers are getting charged the 5% fee, which clearly goes against law.
How did the 5% fee start?
When Dish Network and Directv satellite TV service started there were no 5% charges until cable companies started fearing that they would lose a lot of their customers to satellite companies which offered the same service at a lower price. The cable companies were able to use the fact in Massachusetts Superior Court that they supply TV service to government buildings like schools and libraries to support the local communities, which is why satellite TV companies should have a 5% tax to help the economy also. However they only supply service to government buildings because it is part of their franchise agreements, and it saves them a lot of money not because they are a compassionate company.
Why should both Cable and Satellite companies both be taxed?
Let’s face it today’s economy sucks and Dish Network and Directv is not looking for handouts. Both companies fell that if they are taxed so should all the other cable companies especially when the economy is hurting. The below example shows how cable companies are able to use the service they provide to schools and libraries to save millions.
Satellite TV 5% fee Example
Let’s say the 272,000 satellite customers have an average bill per month of $50, which generates $680,000 a month and $8,160,000 a year in revenue for the state.
Cable TV 5% fee Example
Now lets say the 1.9 million cable customers have an average bill per month of $50, that will generate $4,750,000 million a month and $57,000,000 million a year in revenue for the state.
Let’s be honest do you think that by cable companies supplying schools and libraries in Massachusetts with service is equal to them not paying the 5% fee that satellite TV companies are subject to? . NO IT’S NOT
Let’s go with a high number and say there are 10,000 schools and libraries in the state of Massachusetts that receives service from cable companies. Now to be fair lets say that because they are big accounts they would be classified as commercial accounts so their bill would be around $150 a month if they had to pay.
By giving service to schools and libraries it cost cable companies only $75,000 a month and $900,00 a year to supply their service. That saves cable companies $56 million a year in fees that should also be applied to them.
For a state like Massachusetts that likes to hike up toll fees and property taxes and everything else they can, how do they let cable companies get away with this. That $56 million could go toward building stable bridges and help improve the high unemployment rate in Massachusetts.
Satellite Companies are suing the state of Massachusetts because of the unfairness that surrounds the 5% fee that only applies to satellite TV customers and benefits the cable companies.
By: Frank Bilotta
Satellite TV companies will be the first to admit that cables companies supplying schools and libraries is a good thing, but should they get a $56 million tax break for doing so. Hopefully the lawsuit will make the government drop the 5% fee against current satellite subscribers, or apply the same fee to cable TV companies and use the money to actually improve the state.
