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"Netflix Tax" causes stir in California cities


By Kyle O'Brien | Creative Works Editor

November 11, 2016 | 3 min read

While cable companies figure out how to gain back revenue as people continue to cut the cord and rely solely on streaming video for their entertainment, several California cities are also considering charging consumers for their video streams.

At least a dozen cities in the Bay Area alone are weighing whether or not to adopt a streaming video tax to make up for lost revenue of those who no longer subscribe to cable, according to reports in the San Jose Mercury News and other area publications.

What some are calling the “Netflix Tax” is causing a stir in one of the most expensive areas to live in the country. It would force viewers in places like Menlo Park, Los Altos, San Leandro and other Bay Area cities to pay up to 10% to stream from Netflix, Hulu, Amazon Prime and the like. Some of the towns have ordinances that could be altered to allow them to tax video streaming without new voter approvals.

This has caused a stir among residents and concern for streaming services. Netflix, based in the south bay city of Los Gatos, said that the tax would violate consumer rights.

“It’s a dangerous precedent to start taxing Internet apps and websites using laws intended for utilities like water and electricity,” said Anna Marie Squeo, a spokeswoman for the Netflix, in the Mercury News story. “It is especially concerning when these taxes are applied to consumers without consent and in a manner that likely violates federal and state law.”

Residents could see their services rise anywhere from 50 cents to nearly $2 a month.

Voters in the city of Alameda approved a measure that rolls in streaming video under the city’s utility tax. The city had apparently lost $250,000 a year in revenue as people dropped home phone lines and went wireless, though the tax now allows revenue to be gained on companies providing “video programming” using the internet, according to the San Francisco Chronicle.

Internet rights groups, like the Internet Association, argue that these taxes could “open the door for countless other industries to be targeted for similar tax grabs in the future,” said Robert Callahan, executive director of the Internet Association. “Websites are not utilities, and should not be subject to the utility users tax.”

Still, there will no doubt be more issues like this coming to ballots near you. There are already measures proposed in Chicago and in Pennsylvania.

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