By Garret Gallego
Multiple cities have weighed in on proposals that would issue what is called the Netflix tax, a tax consumers would have to pay in order to watch content. This toll is not exclusive to Netflix, as it targets all streaming and cloud services, including Hulu and Spotify.
Pasadena is just one of the 45 cities considering the new tax. However, Pennsylvania and Chicago have already adopted a new policy that is akin to what the Netflix tax would look like.
Chicago has set the levy at 9%, and officials have estimated that the new tax will raise a total of $12 million a year.
Chicagoans have been protesting and speaking out against the new taxation. Many are calling it “unconstitutional,” believing that it violates the Internet Tax Freedom Act.
The tax also goes against the Illinois constitution by tolling some Internet-based streaming services higher than other similar services that do not use the Internet.
Pennsylvania Senator Jim Christiana expressed his disapproval of the newly adopted tax in a recent statement.
“Technology is no longer a luxury item. There are some small businesses that rely on software to run their businesses that they downloaded from the Internet, Low-income families that utilize these service are often working within a family budget. Whether it’s a [personal income tax] or some new digital downloads tax, it’s going to have an effect on family budgets. That’s why I voted against it,” stated Christiana.
Residents living in Pasadena have also been speaking out against the tariff, complaining that this would count as double taxation, since citizens pay for their Internet as well as the already existing monthly fee to use streaming services.
Residents of the affected cities have been threatening to defy their governments by changing their billing addresses to somewhere else outside of the city in an effort to avoid the tax.
While many believe that the levy is unconstitutional, there are others who support the proposed tax. Advocates compare the Netflix tax to the federal gasoline tax, arguing that because people use a service, they should pay for maintaining that service.
Netflix users saw a recent spike in the price of membership last May from $7.99-$9.99 a month.
In addition, following the introduction of the streaming tax, Netflix has announced that it will be raising its membership fee in Chicago and Pennsylvania.
Netflix has been able to operate its services tax free since the company began in 1997, but that may soon change as cities consider implementing the Netflix tax to boost their local revenues.
With over 47 million subscribers worldwide, Netflix is the most used streaming service in the country.