Some California residents will receive a surprise when their next Netflix payment gets taken out of their bank account, as they’ll be paying a little more than they might have expected. It’s not that Netflix increased their rates, but that Pasadena, Calif. has joined a growing list of cities that actually tax streaming services like Netflix, HBO Go and Hulu.
Pasadena voted last week to apply a 9.4% tax on city residents who subscribe to streaming video services. The tax takes effect Jan. 1, 2017, and would end up costing most residents about $10 to $15 a year extra for their streaming (more than a month’s service). For people with multiple subscriptions, this could add up quickly.
Other parts of the U.S. like Pennsylvania, Chicago, Minnesota already have similar taxes, but California is by far the leader on this front, with almost 50 cities planning to roll out streaming taxes. Other California municipalities tax streaming subscriptions anywhere from 4.5 to 11%.
Cities that are taxing streaming subscriptions didn’t necessarily introduce new taxes, but most are instead taking existing taxes for cable TV and applying them to streaming services.
Of course, there’s plenty of opposition to these (or, well, any) new taxes. Pasadena residents specifically are upset that there was no voter approval for an extension of an existing tax, something that’s legally required. Residents of Chicago actually did sue over their streaming tax.
An attorney for MuniServices, a utility user tax program used by a number of large cities, said that “As companies begin to provide services that look more and more like cable services, there will be a whole bunch more cities that will be adopting (these taxes) in a couple of months.”
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