FISCAL NOTE TO
ASSEMBLY, No. 2332
STATE OF NEW JERSEY
DATED: JUNE 26, 1997
Assembly Bill No. 2332 of 1996 subjects pay per view video service to the sales and use tax. The bill extends the tax to retail purchase and use of pay per view video purchased on a per program basis and delivered by means of cable television, direct-to-home satellite service, telecommunications service or any other means.
The bill extends the sales tax only to purchases of pay per view video programs charged to an address in this State. The Fiscal Note prepared by the Division of Taxation in the Department of Treasury indicates that data are not available to estimate additional sales tax revenue that would be collected under the bill. However the division did note that additional revenue would continue to be collected beyond the next two fiscal years.
The Office of Legislative Services concurs that additional revenues are difficult to project. There appears to be no published data available on retail sales receipts for any of the current pay per view video service providers on a state by state basis. There are reported pay per view revenue data for 1995 on a national level for cable systems operators. These data, reported in an industry sector journal, are attributed to a representative of the media tracking company Paul Kagan Associates Inc. According to Kagan Associates, pay per view revenues of cable systems operators in the United States are reported to have totaled $590 million in 1995 and was projected to grow by 21 percent in 1996. If that projected rate of growth was realized it would have produced national pay per view cable television revenue of approximately $714 million in 1996.
Assuming that the proportion of national retail purchases of pay per view cable programming that is chargeable to New Jersey addresses is roughly equal to the same proportion that the State gross domestic product bears to the national domestic product, or approximately five percent, it may be estimated that about five percent of the projected 1996 national revenue or $35.7 million would have been attributable to New Jersey pay per view cable television revenue. Subject to the 6 percent New Jersey sales and use tax rate, this derived retail sales number would have produced approximately $2,100,000 in annual sales tax revenue during calendar year 1996. No updates for this 1995 national revenue data have been found.
No revenue data have been found for pay per view programming delivered through direct-to-home satellite television service. Satellite-based services require a home subscriber to rent or purchase satellite signal reception equipment which includes a small dish receiver that must be placed upon the subscriber's property. The service can include basic and premium as well as pay per view movie and sporting event services. While the number of total direct-to-home satellite service subscribers nationwide has reported to have grown to over 7 million as of April, 1997, it is not unreasonable to assume that a greater share of national pay per view purchases are still made from among the approximately 68 million cable TV subscribers. No data are available on direct-to-home pay per view satellite TV purchases in the State. Nor are there any data available on pay per view revenue from hotel room pay per view purchases or other commercial resellers of satellite service pay per view events.
This fiscal note has been prepared pursuant to P.L.1980, c.67.