Could Streaming Video Services Be Taxed?

Streaming services like Netflix, Amazon and Hulu are now the one of the most popular ways people watch video content today, but could they be subject to taxes? A recent report from The Pew Charitable Trusts’ Stateline highlights several proposed taxes around the United States that would specifically target streaming video services.

In Chicago, officials originally announced a plan in 2015 to place a nine percent tax on cloud-based services. As an extension of an existing personal property tax, the new proposal would cover both streaming video and services like general cloud-based streaming. After negotiations, the tax rate was reduced to 5.25 percent and went into effect Jan. 1. But as Crain’s Chicago Business notes, enforcement and collection can potentially be problematic:

“The other impact comes if the companies also provide their technology to customers via the cloud. They would have to collect the tax from their customers in Chicago. Among the questions is how such a tax would be collected from a large customer that is headquartered in Chicago but has facilities outside the city where much of that software is used.”

An early proposal in California highlights similar issues for possible taxes on streaming services. In Pasadena, a city official proposed a potential utility tax that would specifically target platforms including “Hulu, Netflix, Sling TV and Fullscreen Media.”

While the prospect and implications of a streaming video tax are still being debated in the United States, similar initiatives targeted at these companies are not a new occurrence. In May 2016, the European Commission highlighted a proposal that would tax Amazon and Netflix to encourage domestic production of movies and other content.