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Provided by Chicago Budget Office 6-23-2016.
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SatelliteTax
SatelliteTax:TheCitycurrentlychargescableTVprovidersbothafranchisefeeandamusementtax.However,federallawprohibitsmunicipalitiesfromimposingataxonsatelliteservices.
BackgroundTheCitycurrentlychargescableTVprovidersa5%franchisefee(forthecableoperator'soccupationanduseofthepublicway)andthe9%amusementtax;however,federallawpreventstheCityfromapplyingthesefeesandtaxestosatelliteservices.
Cablefranchisefeerevenuegrewfrom$15.9millionin2005to$27.5millionin2014.Whilechangesinviewingtechnologieshavereducedcabletelevisionsubscriptionrates,modestgrowthisexpectedtocontinueforthisrevenuesource,dueinparttofeeincreasesandtheriseofon-demandandpay-per-viewchannels,with2015year-endestimatesat$28.9million.
Priorto2014,cablecompaniesreceiveda5percentexemptionfromtheamusementtax,payingtheamusementtaxatarateof4percent,asopposedtothe9percentrateappliedtoothersimilaramusements.Theexemptionwasreducedto3percentin2014,resultingina6percentamusementtaxrateforcablecompanies.The2015budgeteliminatedthisexemption,requiringcablecompaniestopaythe9percentamusementtaxappliedtootheramusements.Thephaseoutofthiscreditresultedinadditionalrevenueofapproximately$25millionovertwoyears.
Additionalinformationonandrevenuehistoryforthecabletelevisionfranchisefeeandtheamusementtaxcanbefoundonpages12and14ofthe2015AnnualFinancialAnalysis.
RevenueImpactA5%tax(mirroringtherateofthecablefranchisefee)onsatelliteservicescouldyieldanestimated$13millioninrevenue.ApplicationoftheCity’samusementtaxtosatelliteserviceprovidersatthesameratethatitappliestocableTVproviders(9%)couldyieldanestimated$24millioninrevenue.
LegalAuthorityFederallawstatesthataproviderofsatelliteserviceisexemptfromthecollectionofanytaxorfeeimposedbyalocaltaxingauthority.47U.S.C.A.152.AnytaxonsatelliteserviceswouldneedtobeimposedattheStatelevel,withtheStatedistributingtheresultingrevenuetotheCity.
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