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Direct broadcast satellite (DBS) services are up in arms over a proposed 5% sales tax that could be imposed on their subscribers in Arizona.

On April 10, the state's senate voted 16–11 in favor of a bill that would levy new taxes on satellite customers. Proponents of the tax say it would level the playing field for television services because cable providers already pay such a tax. "It is a tax fairness issue, where people providing the same services are taxed the same," explained state senator Darden Hamilton (R-Glendale).

The "same service" argument has been questioned by members of the Satellite Broadcasting and Communications Association, who have called the proposed sales tax arbitrary, discriminatory, and anti-competitive. "This legislation ... seeks to use Arizona tax policy to shore up cable's falling market share by taxing only consumers who have abandoned cable for the superior quality, choice, service, and digital signal provided by satellite," SBCA lobbyists wrote in opposition to the plan.

The SBCA has also argued that cable providers have been granted local monopolies and put a load on public infrastructure, and should therefore pay more in taxes than satellite services do. DBS "uses virtually no local services and does not burden the state or local infrastructure," SBCA spokesmen stated. They also argue that the proposed tax will place an unfair burden on rural residents, who have a much higher rate of DBS subscribership than do urban dwellers.

Should it win approval in Arizona's house of representatives, the satellite tax could raise $13 million in its first year, according to proponents. The state's cities and counties would directly benefit from the revenue, they stated.