NEWS

Chicago Slaps 9% Tax on Netflix

Kate Scanlon • July 8, 2015

Sorry, Chicagoans: Your Netflix bill is about to go up 9 percent.

The Windy City has decided to tax a new source of revenue: streaming services.

Chicago’s Department of Finance has ruled that streaming services fall within the purview of the city’s amusement tax.

According to the City of Chicago, the “privilege” of watching “electronically delivered television shows, movies or videos” is subject to the city’s amusement tax. Online music and video games are also subject to the 9 percent tax.

The amusement tax does not apply to sale or permanent download of electronically delivered forms of entertainment, but it does apply to rentals and streaming services such as Netflix and Spotify.

“In an environment in which technologies and emerging industries evolve quickly, the city periodically issues rulings that clarify the application of existing laws to these technologies and industries,” a spokesperson for the mayor said in a statement, according to the Chicago Tribune.

The city estimates it will collect approximately $12 million in revenue each year from the tax.

A spokesperson for Netflix confirmed to the Chicago Tribune that the company “will pass the additional cost onto its subscribers.”

Residents of Chicago can continue to binge watch their favorite shows at the current rate until Sept. 1, when companies must begin to collect the tax from Chicago customers on behalf of the city.

Kate Scanlon | Contributor

Kate Scanlon is a former news reporter for The Daily Signal and graduate of The Heritage Foundation's Young Leaders Program.

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