Could you be faced with a Netflix tax?
As if the US hasn’t had a tough enough time of things recently, a number of states have started levying a tax on Netflix users. In the days of yore, when TV subscriptions and video rentals (remember those?) where the entertainment du jour, revenue was easily collected via cable bill tax or sales tax.
But with the demise of those entertainment services comes a shortage of revenue, which officials are looking to offset by taxing streaming services such as Netflix, Amazon and Hulu. The so-called “Netflix tax” is already up and running in Florida, Pennsylvania and Chicago.
With sales tax revenue in the states growing by less than 1% last year, and forecasts for growth particularly grim for 2018, according to the Rockefeller Institute of Government, the taxes are being introduced as a means of targeting this stagnation. Larry Downes, of Georgetown University’s Center for Business and Public Policy, described the onset of the Netflix tax thus: “The way, particularly, municipalities rationalise this is, ‘Well, we don’t have Blockbuster Video anymore. We were charging them tax, that’s got replaced by streaming services like Netflix, so for us it’s really just replacing one tax with another for the exact same service.’”
Meanwhile, the streaming services themselves, in addition to consumer tax groups and technology trade organisations, have rallied against the taxes, claiming they can halt innovation. Netflix spokesperson Jonathan Friedland was sober about the imminent onset of such taxes, telling USA Today: “Our view is that it is a dangerous precedent to start taxing internet apps and websites using laws intended for utilities like water and electricity.”
The debate around internet taxation has come to the fore recently with President Trump’s sustained attack on Amazon boss Jeff Bezos for Amazon’s tax policy. In June 2017, Trump called out the #AmazonWashingtonPost for failing to pay its “internet taxes”.
More recently, Trump berated the company for doing “great damage to tax paying retailers”, blaming the internet giant for a widespread loss of jobs.
It seems whatever your stance on the Netflix tax, the debate around digital taxation is heating up. With Trump harbouring a disdain for Bezos, in addition to a propensity for throwing his toys out the pram, who knows what the future could hold for “internet taxes”. In the meantime, if you thought ‘Netflix and chill’ was a cheap date, it might be time to start looking for viable alternatives.