Ohio Supreme Court OKs state's satellite TV tax - Cincinnati News, FOX19-WXIX TV

Ohio Supreme Court OKs state's satellite TV tax

COLUMBUS, Ohio (AP) - The Ohio Supreme Court has upheld a state sales tax for satellite TV providers that cable competitors don't have to pay, rejecting arguments from the satellite industry that the tax is unfair and unconstitutional.

In the 5-2 decision released Monday, the state's highest court ruled that the 2003 tax does not violate the U.S. Constitution's Commerce Clause because the tax is based on differences between the nature of the businesses and does not favor in-state interests at the expense of out-of-state interests.

Satellite companies had argued that subjecting them and not their cable competitors to the tax violates their rights to interstate commerce, because their companies operate between states while cable companies operate within them.

But writing for the majority, Justice Terrence O'Donnell wrote that the justices concluded that Ohio lawmakers "imposed a sales tax that makes no distinction between local and interstate commerce, but rather distinguishes based on the mode of distributing television programming."

Ohio has collected about $44 million a year since imposing the 5.5 percent sales tax on satellite TV as part of a budget-balancing tax package in 2003. The Legislature chose not to apply the tax to cable operators, which pay local franchise fees that range from 2 percent to 5 percent.

The lawsuit that reached the state Supreme Court was brought by DirecTV Inc. and EchoStar Satellite Corp., and the decision affirms an earlier ruling from a state appeals court. The satellite industry has challenged similar tax discrepancies in several other states, and attorneys said earlier that an Ohio high court ruling either way would likely be appealed to the U.S. Supreme Court.

DirecTV and EchoStar also say if the tax were applied equally to both industries Ohio could collect millions more in tax revenue.

The companies said in a statement Monday that the Ohio Supreme Court ruling means Ohio consumers won't have an alternative to increasing cable TV costs.

The companies said they are weighing their options. Attorneys for the satellite industry indicated earlier that an appeal was likely.

In a dissent joined by Justice Paul Pfeifer, outgoing Chief Justice said flatly that the sales tax was indeed unconstitutional.

 "It treats sellers of the same service differently. That's discrimination," Brown wrote.

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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