Chicago Starts Collecting on “Netflix Tax”

Chicago Starts Collecting on “Netflix Tax”

By Tess Farrand, Staff Writer

The Windy City is home to the Chicago Bears, deep dish pizza and, to the regret of some consumers, a new tax on streaming services. MOVIEGUIDE® previously reported that consumers are moving away from cable to streaming due to high costs, but will the costs of streaming services start going up? One plausible outcome could mean what some are calling a “Netflix tax.”

“The city collected $1.2 million from Sony in January, on services including PlayStation Video live events and purchases of music and video,” according to Bloomberg. It also collected nearly “$800,000 from Eventbrite and $70,000 from Fandango.” It appears that Sony would rather pay a tax on streaming rather than continue in a legal battle. According to CBS News, “the levy has been dubbed the ‘Netflix tax’ because it targets streaming video services in addition to gaming and other digital entertainment.”

Will this new streaming tax be specific to solely Chicago? Maybe not….

Director of the Urban-Brookings Tax Policy Center, said in a statement to CBS News, “cities and states are beginning to experiment with this. People are buying more and more services and less goods, so the sales tax pace is getting reduced, and you end up trying to find ways to raise revenue from services.” Reportedly, Pennsylvania and Rhode Island have instituted similar regulations on streaming taxation and in 2018, the Supreme Court rule in favor of states to imposes these streaming taxes.

With competition increasing, and the need for companies to spend more on original programming, and the government taxing streaming services, it’s inevitable that streaming services will have to start raising their monthly prices, something Netflix already started doing last year.

For those that have already cut the cable cord, at least with streaming you have the option to choose which services you pay for based on what you’re using.

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