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Some US Cities Have Begun Charging Tax for Online Streaming

Some cash strapped cities in the US have begun introducing a “NetFlix” tax on online streaming services, angering many netizens who see the move by the government as a desperate cash grab. Some politicians would not disagree and categorize it exactly as that. The steady decrease of cable TV and home phone subscribers in 2016 has taken a chunk out of lost tax revenue for some cities and many see that the number of users that subscribe to these services will just continue to decrease further.

In 2008, the citizens voted to update an existing law to tax mobile phones like landlines but that law is now being applied by the government to video streaming devices delivering media content in to their homes. This law was first passed in Pasadena, California but is now also on the books of 40 other cities in the state of California.

The residents in those cities are fighting back however, voicing their anger to politicians and even threatening a lawsuit if the government decides to collect the taxes. Chicago has done a similar move in a bid to close a budget gap, spearheaded by their Mayor and City comptroller. Chicago is charging a 9% tax on video streaming is currently in the middle of such lawsuit. Opponents of the tax hike cite that taxation of such services is a violation of a federal Internet Freedom Tax which bans cities and states from imposing discriminatory internet-only taxes.

The result of these lawsuits will most likely define how pricing is going to be for online services in the next few years, so needless to say, both sides are fighting aggressively with the government even pushing to “clarify” existing definition in the law books to buttress their argument when it comes to taxing online streaming services.

 

Ron Perillo

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