In the last decade or so, the rise of streaming video has led to a huge shift in how Americans at large consume movies and TV shows. At the forefront of this movement has been Netflix, the streaming giant which of course began life as a way to rent DVDs through the mail, but has since evolved into the most popular subscription VOD service in the country. Netflix’s rise has since naturally led to the formation of competing services such as Hulu, Amazon Prime Video, and HBO Now. The abundance of affordable streaming content has played a huge factor in millions of former cable customers choosing to “cut the cord” and go online only for their entertainment.
In addition to obviously upsetting cable companies, the trend of cord-cutting is also not sitting well with local governments across the U.S., who had long-since established state and local taxes and surcharges that every cable subscriber had to pay along with their bill. Seeking to make up for that lost tax revenue, some cities have opted to impose a tax on video streaming services.
CBS News reports that the latest such place to make this widely unpopular move is Pasadena, CA, who announced the new tax a few weeks back, but has yet to implement the change due to the stiff opposition it currently faces. 40 other California cities also now have streaming taxes on the books, although they too have yet to start collecting. This is likely due to the fact that the few places that have – including Chicago – are facing legal challenges based on the fact that federal law does not currently allow the internet to be taxed as a utility.
Pasadena city councilman Tyron Hampton – who is against the streaming tax – offered the following reasoning for his opposition:
“My constituents do not want this tax. Even if it is just a couple of dollars. It is being taxed twice. Where do we stop, is it Hulu, is it Netflix, Pandora, every time you stream music in your car? I mean where does it stop?”
As the world of pop culture consumption moves further and further into the streaming realm – DirecTV is soon to offer an over-the-top streaming service called DirecTV Now, the first such entirely online service from a major traditional cable or satellite TV provider – one assumes that taxes like this will become more and more common, at least until the courts or the federal government step in and take a firm stance on the legality of such practices. Until then, viewers in most places can still feel free to stream shows like House of Cards or Game of Thrones without fear of an additional tax on their bill.
Source: CBS News