N.Y. Latest to Propose Cable, Satellite Taxes

Cable and satellite companies and their customers could be paying more for service in New York State, based on a proposed budget presented Tuesday by Gov. David Paterson.

Among the 88 new fees, 10 fines and 39 new tax items in the proposed budget, Paterson has recommended applying a sales tax on video and radio services delivered by cable, satellite or "by similar means." The governor justified the recommendation noting that 23 other states tax video services. The current sales tax in New York state is 4%.

Direct broadcast satellite companies have not accepted any state tax levy attempted upon the service, challenging each in court. The providers argue that as a satellite-delivered service, they create no taxable local presence, nor do they use local infrastructure. In fact, one of the states which approved a satellite tax, Ohio, is currently considering repealing the levy after a state court tentatively ruled the tax unconstitutional.

Some telephone customers could also pay more after a recommendation was suggested to increase the regulatory fee paid by utilities. That levy would increase from .33% of interstate revenues to 1%.

Industries will have a hard time arguing against the fees. Paterson and the legislature are trying to close an estimated $13.7 billion budget gap, and the governor's cutbacks and new taxes hit agencies, schools and industries across the board.