Entertainment

Stream a Few Shows, Pay a Lot More Tax

Netflix users in many cities could be forced to cough up extra dough just for the privilege of chilling

In an effort to combat lost revenue to the cord-cutting revolution, dozens of California cities are looking to implement new taxes on the streaming service and others.

The law is not without precedent. The city of Chicago passed a 9-percent tax on video streaming apps that was met with a class action lawsuit. The entire state of Pennsylvania passed the same tax at 6 percent.

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Cities in the Golden State such as Pasadena are looking to tax services such as Netflix and Hulu as utilities. Some of the taxes are as high as 9.4 percent. No California city has yet to begin collecting the tax — but roughly 40 cities, among them Santa Barbara, Stockton, and Sacramento, have gotten guidance from municipal consultants on how they might, as The New York Times noted.

With 47 million subscribers to Netflix in the U.S. alone, the tax would be a big earner for cities everywhere. Residents, however, are not responding well.

“These cities are trying to use a decades-old utility tax to take a tax out of your websites and apps, such as Netflix and Hulu and possibly others,” Michael Beckerman, president and CEO of the Internet Association, told Yahoo. “It’s a slippery slope. If you’re going to say a website or an app such as Netflix, Hulu, others are utilities, then frankly anything can be a utility.”

“Where do we stop — is it Hulu, is it Netflix, Pandora, every time you stream music in your car?”

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By referring to certain internet apps as “utilities,” city governments are allowing themselves to run wild with new taxes in this internet age. In Pasadena, the city is using a ruling that allowed the city council to tax cellphones in the same manner as landlines.

“My constituents do not want this tax,” Pasadena City Councilman Tyron Hampton told CBS News. “Even if it is just a couple of dollars. It is being taxed twice.” He continued, “Where do we stop — is it Hulu, is it Netflix, Pandora, every time you stream music in your car?”

Internet Association Director Robert Callahan told CBS News he believes the new taxes break federal law. “Utilities are water, and electricity, and sewer, and all sorts of other utilities. Websites and apps don’t fit that mold whatsoever.”

Cities like Chicago are looking to close huge budget gaps — $1.3 billion in that city alone — so they’re looking to the widely used internet and video streaming apps for compensation. Instead of cutting spending — they are looking to ruin one of the few things everyone can agree is great: Netflix and chill.

Related: The Night Netflix Went Dark

When the new line appears on citizens’ internet bills, there is little doubt this will end up in court. There also should be little doubt that other cities across America will look to be forcing similar taxes on their citizens.

Meanwhile, as local governments work to implement the new taxes, Netflix has announced a new feature to its service: It will allow customers to download certain videos in order to watch offline, so as not to use any internet service or cellular data. Netflix announced that more content is on the way — but for now, customers can download the collection of videos with the latest version of the Netflix app for phones or tablets using iOS or Android. 

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