Wednesday, November 07, 2001

Cable TV provider to fight tax

Company says assessments unfair

By Mark R. Chellgren
The Associated Press

        FRANKFORT — One of Kentucky's largest cable television providers plans to challenge a state property tax on the grounds it unfairly singles out cable services while leaving competitors untaxed.

        Insight Communications Inc. will announce Thursday it will sue to overturn the state intangible property tax it pays.

        In a press release Tuesday, the company said the basis for the tax has changed since it was enacted more than a decade ago. Insight said it now faces competition from satellite television services, which are not subject to the tax, which has effectively negated any monopoly it might have enjoyed that warranted the tax.

        According to the Revenue Cabinet, the tax is assessed on the accounts receivable and other assets of the company, such as the value of its franchise. It does not include the separate taxes on physical equipment.

        The tax raised about $6.6 million for the state in 1999 but a much more significant $14.1 million for local taxing districts.

        Revenue spokesman Alex Rose said the agency was unaware of the planned lawsuit.

        Colleen Quinn, senior vice president for corporate relations with the New York-based company, declined to provide details about the lawsuit or whether other cable companies would join as plaintiffs. Ms. Quinn said the company would hold a news conference Thursday in Frankfort.

        Cable companies still operate under what amount to monopoly franchises for television service granted by local governments. Some also offer Internet access over their cable lines.

        Ms. Quinn, though, said the market has changed dramatically with competition from satellite services taking nearly half the business in some areas. Satellite services are not subject to many of the taxes imposed on cable, including local sales taxes as well as the property tax.

        The intangible property tax has come under increasing legal attack in recent years and many challenges have been successful, especially when they have claimed unfair or unequal treatment. For example, the tax that placed different rates on stocks and bonds in companies based in Kentucky or elsewhere was thrown out by the courts.

        Insight provides service to about 420,000 customers through 189 franchise areas around Kentucky.


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