Will Your Netflix Soon Be Taxed?

Some states are closing in on applying a tax to Netflix and other streaming services.

moneyYou knew governments would try to find a way to get their share of the mega-shift away from traditional cable services.

Your monthly bills for Netflix, Amazon, Hulu and more video streaming services see an increase soon as some states, like Illinois, attempt to find ways to offset dwindling sales tax and other revenue declines. Chicago, Pennsylvania and Florida have already passed the so-called Netflix tax. Cities such as Pasadena, CA are exploring the issue as well.

These taxes would result in additional fees of less than $1 per month to consumers. However, over the months — and added onto multiple streaming subscriptions –they may add up to more than $50 every year.

Netflix, consumer tax groups and tech trade organizations have voiced opposition to these taxes, warning that they can deter innovation and are simply unfair. Various opponents have started legal challenges, with at least one state aborting its plans following a court decision. However, that doesn’t mean state and local governments are not likely to renew efforts as declining pay-TV subscriptions and video rentals mean there are fewer opportunities to tax cable bills or charge sales tax at the register.

Multiple states, including Alabama, Illinois, Louisiana, Maine and West Virginia, have broached adding taxes to streaming and digital entertainment. Those cities/states that have already passed the so-called Netflix tax give an idea of the fees facing customers.

Chicago amended its 9% amusement tax, originally written to tax sporting events and concert tickets, in 2015 to now apply to Netflix and other streaming services — including online game networks. For Netflix or Spotify subscribers with a $9.99 monthly plan, that equates to an additional 90 cents each month or $10.79 for the year.

In August 2016 Pennsylvania expanded its 6% sales tax to encompass streaming entertainment, as well as downloads of apps, games, e-books, movies and music. So, when Amazon or Apple sells a $13.99 e-book to a Pennsylvania resident, the seller has to charge an 84 cent tax. The state of PA has collected approximately $46.9 million in the first 10 months since installing the tax.

Washington, Florida and North Carolina also tax digital goods.

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