September 17, 2015

Chicago being sued over Netflix tax

This post was written by: Patrick Macavoy

netflix logo on a red background

You may of heard that the city of Chicago (possibly having some financial trouble and a creative finance team) had decided to place an ‘amusement tax’ on Internet related services, this not only means streaming services like Netflix and Spotify but also gaming services like PlayStation live or World of Warcraft will have to jump their prices to Chicago subscribers.

The tax was aptly dubbed as the ‘Netflix tax’ and will force the providers to up their usual price by a 9% hike. Speculation by the Chicago Tribune claims that this tax is merely an attempt to fill a budget hole, it’s been estimated to bring in a modest $12,000,000 annually.

After a few months of the tax being proposed, the city of Chicago has felt the wrath of its riled internet streamers. Amazon and Netflix customers have filed a lawsuit against the city, alleging that the ‘Netflix tax’ has violated city policy and unfairly punishes them for streaming these sites, additionally the lawsuit claims the city has no authority to tax internet services at all.

Click here to read a copy of the Tax Complaint.

This kind of lawsuit brings into question not only American wide tax laws but could affect us across the pond on issues of taxing internet services and whether it is lawfully viable. This is due to declines in sales tax becoming a realisation with the influx of internet services changing the market forever.

The decision of the court on this case could determine whether your Netflix bill could take a steep hike.