- The Washington Times - Wednesday, July 25, 2007

Cable TV and telephone subscribers pay $37 billion a year in taxes and fees, according to research conducted by two free-market think tanks.

Local taxes on cable, wireless and wire-line phones on average are twice as high as taxes on other retail goods — 13.52 percent compared with 6.61 percent — conclude researchers from the Heartland Institute and the Beacon Hill Institute.

The two groups examined data from 59 U.S. cities, including Baltimore and Annapolis, in compiling “Taxes and Fees on Communications Services.”

As dry as the report’s title might sound, the fact that an average household pays $20.51 a month in taxes and fees on cable and phone services is surely of interest to subscribers everywhere.

“Many of these taxes and fees are hidden in phone and cable bills,” said David Tuerck, executive director of the Beacon Hill Institute and chairman of the economics department at Suffolk University in Boston. “Because they are so high, they distort consumer decisions and business investment decisions, costing billions more every year in lost consumer benefits.”

The groups identified franchise fees and access fees as some of the biggest costs imposed on cable companies, which are also subject to sales taxes and public-utility taxes. Cable video customers feel this burden to the tune of $6.12 per month, the study said.

As for wire-line phone service, federal Universal Service Fund fees, state sales taxes and so-called 911 fees raised bills by an average of $8.50 per month.

Wireless phone customers pay similar fees, authors noted, but cell-phone companies have also been targets of “specific discriminatory city and state excise taxes.” For example, Baltimore imposed a $3.50 monthly tax on wireless users. Cell-phone users pay an average of $5.89 per month in taxes and fees.

Meanwhile, taxes on broadband Internet access are largely nonexistent but not without exceptions.

The bottom line? Study authors call for lower taxes and video-franchising reform that would make it easier for video-service providers to compete with cable companies.

City Paper sold

The Washington City Paper has been sold to Creative Loafing Inc., a Florida company that owns a chain of four similarly described “alternative weeklies.”

Creative Loafing also bought the Chicago Reader, whose founders also controlled the City Paper. Terms of the deal were not disclosed. The City Paper has a circulation of 80,000.

Ben Eason, chief executive officer of Creative Loafing, said the acquisitions reflect the company’s “confidence in the future of alternative publishing — in print, on the Web and in other media as they emerge.”

Mr. Eason made the announcement to City Paper employees yesterday, assuring them that he doesn’t plan to interfere in editorial affairs, reporter Mike DeBonis wrote on the paper’s Web site, www.washingtoncitypaper.com. Publisher Amy Austin and editor Erik Wemple will stay in their current positions.

The deal will streamline operations for all six papers now under the Creative Loafing umbrella, said the Tampa, Fla., company, with weeklies in Atlanta, Tampa, Sarasota, Fla., and Charlotte, N.C.

Channel Surfing runs on Wednesdays. Call 202/636-3139 or e-mail krowland@washingtontimes.com

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