Local Governments Want to Tax Internet Services as They Do Cable TV & the FCC May Allow It





Man stressed over piece of paper

The decline of cable TV has also hit local governments in the pocketbook. As fewer Americans pay for cable TV, local governments are pulling in less tax money than they once did from local cable TV fees.

According to the City of Baltimore, the loss of cable TV revenue has resulted in a $1.3 million deficit in the first quarter of 2023. This comes as only 24% of households in the city are still paying for cable TV. 

To offset this, cities are pushing the FCC to roll back changes that happened under FCC Chair Ajit Pai that prevents them from taxing streaming services like they do cable TV companies.

In a meeting on January 3, 2024, representatives of local government met with the FCC to ask them to allow local governments to tax streaming services like the Internet as they already do cable TV.

Under Republican chair Ajit Pai, the FCC pushed back on such efforts saying “mixed-use network ruling should be applied to prohibit LFAs from using their video franchising authority to regulate non-cable services offered over cable systems by incumbent cable operators,” according to a report from NextTV.

This change would allow local governments to tax Internet services like they do a cable TV subscription. If this proposed rule passes, Internet subscribers will likely see their Internet prices go up about 5% on average.

With the FCC’s recent efforts to roll back changes made under Pai, many are worried that the FCC will be willing to let local governments tax Internet services in the same way they tax local TV services over cable TV.

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