Champaign City Council votes to raise taxes on cable bills

Champaign residents will now be paying higher taxes on their cable bill due to the cable franchising fee, approved Tuesday by the city council.

The Champaign City Council voted to raise the tax on residents’ Comcast and AT&T; bills, from 3 percent to 5 percent. That is a difference of about $1.48 to $1.58 for the average Comcast user, said Jeff Hamilton, city telecommunications official.

“It’s one of those fees that’s pretty universal throughout the country,” he said. “We actually could not find another community in Illinois that was not taxing the max, 5 percent.”

The tax is capped at 5 percent by the federal government.

The cable franchising fee was imposed in order to compensate for the deficit in the budget.

“There’s a 6 million dollar hole in the budget due to the economy,” said Steve Carter, city manager.

Reallocations and cuts will make up for the majority of the deficit, but various fees will also be raised in order to fill a $1 million gap, he said.

The city council is also discussing imposing a new natural gas tax.

Ameren utility bills are taxed, but natural gas that people buy wholesale from out-of-state vendors has not been taxed in the past. The details are still being worked out, but the University would be excluded from this tax by law, Carter said.

There is concern among council members that various taxes and fees affect consumers’ preferences.

The cable franchising tax is considered a “right of way” tax, for the poles and cables that are strung through public land. This means that satellite television will not be taxed.

The tax on Ameren, but not on natural gas may also affect consumer behavior, said Tom Bruno, councilman–At Large.

“It’s probably pushing consumer behavior towards out-of-state natural gas,” Bruno said. “Maybe that’s an unintended consequence [the tax would address],” he added.

The tax on these services is along the same lines as the traditional taxes on utilities such as telephone and electricity. The internet is one utility that the federal government prohibits taxation on.

Although the Council did pass the cable franchising fee with a unanimous vote, council members were not enthusiastic about adding this tax.

“We raise all fees reluctantly,” said Mayor Gerald Schweighart.