“A BRAND NEW SOURCE OF REVENUE”
by Alex Vidal, Tax Revolution Institute, ©2017
(Jan. 25, 2017) — Let’s hope you were able to get in all your binge watching before the new year, as online streaming entertainment may very well be the next thing that we enjoy slapped with a tax.
Many cities across the country have found that taxes from utilities have taken a hit with the rise in the number of people who have decided to “cut the cord” from cable companies. During the second quarter of 2016 alone, over 812,000 people cancelled their paid television subscriptions and switched to various streaming services like Netflix, Hulu, and SlingTV, which only require internet access.
As that telecom tax revenue continues to fall off, cities across the country are losing approximately $50 dollars (much more in larger cities) per cable subscriber in tax. Accordingly, lawmakers have discovered a brand new source of revenue in digital entertainment.
It’s called the “Netflix tax,” and it is beginning to be included as part of different cities’ amusement, sales, and, in some cases, even utilities tax. In 2015, Chicago was the first major city to enact a 9 percent “cloud tax” on digital entertainment services. The tax was already in effect for things like tickets for sports events and movies. Now, it also covers the streaming of online entertainment, like video games and Netflix-type services. The city estimates that the new digital entertainment tax will be worth $12 million dollars per year in additional tax revenue.
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