Every message starts with the same phrase: “Don’t tax my TV,” and devolves from there into a litany of reasons why the state Senate shouldn’t impose a 5 percent excise tax on satellite television companies, such as Dish Network and DirecTV.
Hundreds of Vermonters across the state have sent that message to senators over the past 48 hours, motivated by dire warnings from Dish that monthly fees would go up as a result of the tax.
The Senate Finance Committee has proposed a 5 percent excise tax on satellite TV providers that would raise about $5 million.
While the tax package, which was passed in a 22-7 vote on the Senate floor on Thursday includes many controversial components, none have generated as much electronic vitriol as the couch potato tax.
Businesses have complained with some vehemence about H.489 and the proposed income tax changes and sales taxes on candy, soda and bottled water.
But the complaints have been tame compared with the tidal wave of unmitigated wrath from consumers who say TV is an essential service, and they can’t afford to pay more.
Dish says the tax is “regressive” and “unfairly impacts low and middle income Vermonters and Vermonters in more rural parts of the state who rely on satellite television.”
In other words, if you live in the sticks, a satellite dish is the only option for TV, and if you live in the sticks, you need TV.
Lawmakers say the excise tax would even the playing field between satellite and cable TV providers, which pay an infrastructure fee.
The state’s 6 percent sales tax is already assessed on satellite and cable TV service.
In a news release and messaging to consumers, Dish TV makes the tax sound like an additional sales tax that would be felt by consumers, but that’s not the case, according to Sen. Mark MacDonald, D-Orange.
The tax is on the company, and it’s unlikely that Dish would change its rates to pass the cost of the tax onto Vermonters, MacDonald says.
About 100,000 Vermonters use the Dish service, according to the company.
H.489 will be on the floor for third reading today (Friday), and it’s likely that there will be an amendment to kill the satellite tax.
And that likely won’t be the only amendment removing revenue streams from the pot.
Gov. Peter Shumlin, a Democrat, doesn’t like anything about Senate Finance’s $20 million tax package, and he has pressed lawmakers to find more money to cut from the budget.
The problem is, the governor decided to insert himself in the process just before the money bills went to the floor of the Senate. Now the Democratic majority in the House and Senate, who spent months developing mirror budget and tax bills, is balking at Shumlin’s last-minute insistence that they change their proposals, which they say lower spending and raise less in taxes than the governor’s own tax and spend plan.
Tiered employer assessment stokes opposition
Another provision in the tax bill that is generating opposition and went largely unnoticed is a tiered employer assessment to support state health care programs.
The tax is now about $140 a quarter for all businesses.
Under H.489, that rate will go up depending on the number of full-time equivalent employees who are not offered health insurance through their employer.
For businesses with 50 to 249 workers, the assessment would be be $228 per quarter. For companies with 250 or more, the rate would be $319.
The employer assessment was designed to help low-income Vermonters with premium subsidies for the Catamount Health Plan. When Catamount was dissolved to make way for a new subsidized health care program through Vermont Health Connect, the employer funding mechanism continued.
Shawn Shouldice, a lobbyist who represents the National Federation of Independent Businesses, says the employer assessment raised $18 million last year and some of the money was used to “fill the $3 million budget gap.”
Shouldice argues the employer assessment should be repealed.
“VHC doesn’t work, so small businesses are purchasing their coverage directly through insurers; which means this is a funding source without a purpose,” Shouldice said in a statement. “The EA has apparently become a convenient penalty to grab money in order to fund over spending.”
Other tax changes
The Senate, like the House, had to find $35 million in revenues to fill a $113 million gap in the state budget.
Here are the other changes the Senate is proposing to make to the tax code:
- Only in-state charitable contributions to qualified nonprofits would be eligible for a tax break.
- The itemized mortgage deduction is capped at $12,000 in interest payments per year.
- The Senate Finance bill would extend the 6 percent sales tax to candy, soda and bottled water, which would raise $11 million, $7.2 million for the general fund and $3.3 million for the education fund. (The House has a similar proposal to support health care spending, but doesn’t tax bottled water.)
- Vending machine food would be taxed at the 9 percent meals rate, generating about $1 million a year in revenues. (The House has an identical proposal.)
- The legislation would allow the Tax Department to garnish the wages of scofflaws, which would bring about $2.3 million into state coffers.
- Under H.489, any town or city could impose a 1 percent local option tax on sales, rooms, meals, and alcohol. The local option has largely been limited to former “Gold Towns.”
- The elimination of a state income tax deduction that would raise $15 million in state revenues.
