D*sh Network and D*recTV filedsuit today in Massachusetts Superior Court against the state of Massachusetts over its recent decision to levy a 5% state sales tax on satellite service.

They argue the tax is discriminatory because no similar tax is levied on cable. "The lower sales tax imposed on cable subscribers serves only the parochial economic interests of those businesses and deprives the public of sales tax revenues."

D*sh and D*recTV argue that that 5% difference could be enough to persuade the 275,000 satellite subs in the state to switch to cable, which already claims 1.9 million. It also points out that the state is forgoing another $80 million in revenue that it could use in the current economic crisis.

They say there is no rationale basis for disciminating between satellite and cable when "the latter imposes far greater demands on the State for services, infrastructure, easements, and environmental impact."

The DBS leaders want a declaratory ruling that the tax violates the Commerce clause (it discriminates against interstate commerce, they argue) and Equal Protection clause (taxing satellite at a higher rate than cable) of the Constitution, a permanent injunction against it, and a rebate of the taxes.

The cable industry has pointed out that it already pays real estate, personal property and other taxes, as well as state regulatory fees. Cable operators also provide services under franchise agreeements, including carrying PEG channels and providing service to schools and libraries.

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