The Virginia General Assembly passed a bill that would impose a flat-tax on all communications and video services, including satellite radio and Internet telephony. Instead of four separate communications taxes, there would be one, across the board 5% tax. Sounds good, everyone likes harmonizing and streamlining regulation. But... something's not right.  Why is satellite radio being taxed next to phone companies, cable providers, and VoIP? Especially since over-the-air radio & TV, Internet service, and music download services are specifically exempt! A sharp blogger named Craig Vitter had these same questions and wrote a Virginian Delegate to get some answers.  Delegate L. Scott Lingamfelter responded, and Craig was kind enough to post the letter and his commentary here.

In his first post on the subject, Craig makes the point that satellite radio is not similar to traditional telecommunications services that use public facilities, nor is it in competition with the likes of cable and DBS. I think this is the most compelling issue; the Richmond Times-Dispatch quotes State Senator Jeannemarie Devolites Davis as saying the bill would put Virginia "down the path of taxing content," and she's right. The taxes this flat-tax replaces are about public utilities, telecom subsidies, and local cable franchise fees. Satellite radio is a service that does not use public facilities - the tax is therefore discriminatory.

[Via FMQB and the TimesDispatch.com. Special thanks to Jeff Kelley at the Times-Dispatch.]