The government wants to make sure you aren’t enjoying your streaming services too much.
Lawmakers are looking for ways to pull in money and now even digital services won’t be spared. In the entertainment realm, a streaming services tax is actually an appealing alternative to taxing local businesses like movie theaters. As people ditch old telecom technology like landlines, cities have lost an important source of revenue.
In Pasadena, California the tax on subscription streaming services like Netflix has been raised to 9.4 percent. There are over 40 cities in California that must cough up money for using Netflix, Hulu and the like, according to CBS News. Here are some places where subscribers to streaming services like Netflix must pay the fee.
Pasadena raised the tax on services like Netflix to 9.4 percent, which would bump a 9 dollar monthly subscription cost to nearly 10 dollars. Even some city officials said they were surprised by the tax, which came from a law Pasadena voters approved in 2008 that taxed cellphones like landlines. Pasadena City Council member Tyron Hampton told CBS News that the tax was meant to compensate for lost revenue due to falling cable TV subscriptions. However, some don’t think the tax is lawful. The Internet Association Director Robert Callahan said Internet services shouldn’t be counted among utilities that are taxed.
While some cities may propose their own taxes on streaming services, others can simply adjust existing legislation to enact the tax. Here are some cities in California that could implement the tax without asking voters for approval again, according to SiliconValley.com.
Chicago is the first major city to charge a “cloud tax” for digital entertainment services, according to Slate. In what could be its own revolutionary drama, six Cook County residents are taking the city to court. They challenged the city after it expanded its 9 percent “amusement tax” on 2015 June 9 to include streaming services. The Liberty Justice Center, a small Chicago-based law firm, is representing the plaintiffs, who claim the tax harms them and was not approved by Chicago’s City Council. In addition to the so-called “Netflix Tax” the city has raised money through a cloud tax, which applies to B2B services that provide cloud hosting like Amazon Web Services.
Pennsylvania debuted its 6 percent sales tax on digital downloads and streaming subscription services in August. The so-called Netflix tax was included in a revenue package meant to bridge the state’s $1.3 billion budget gap. The taxation of digital products, which includes apps and downloads, is projected to bring in $47 billion to the state, according to Pittsburgh’s local station Action 4 News.