Dec 08

California Cities Weigh “Netflix Tax” For Online Video Streaming:

Government is on the verge of completely destroying the economy all because those in power are incapable of managing even a bubblegum machine, rages Armstrong Economics’ Martin Armstrong.

Local cities are desperate for money as their own pensions moving closer to collapsing.

Instead of dealing with the problem, of course, they always choose to just tax the stupid people.

Pasadena city officials are considering whether to tax subscribers of Netflix, Hulu, and other video streaming services under an existing municipal utility tax code that was initially designed for taxing cable television users. Sacramento and dozens of other California cities have similar codes that they are looking to use to tax video streaming. As NYTimes reports,

Dozens of California cities looking to shore up revenues are flirting with a new idea — tax your “Gilmore Girls” binge.

Pasadena was among the first to say publicly this fall that it wanted to tax video streaming services like Netflix, a step that could make up for lost tax revenue from growing numbers of cord-cutters.

At 9.4 percent, the so-called Netflix tax would treat streaming services as a traditional utility, the city said. If you use multiple services — for example, Hulu, Amazon Video and HBO — it would be added to each bill.

The move in Pasadena, with a population of about 140,000, has drawn consternation from technology companies and consumers who worry that it could be copied across the state.

“Websites and apps are not utilities and it defies logic to tax them like electricity, water or gas,” said Noah Theran, spokesman for the Internet Association, a trade group.

No California city has yet to begin collecting the tax. But roughly 40 cities, among them Glendale, Santa Barbara, Stockton and Sacramento, have gotten guidance from municipal consultants on how they might.

Public officials have argued that taxation rules need to be revised to account for changing technologies. It is unfair, some say, that people who get video through cable television are taxed while those who have shifted over to internet streaming services are not.

One question officials would need to resolve is where to stop, analysts say. If streaming video is taxable, then what about music, podcasts or video games?

“It opens a big Pandora’s box,” said Paul Verna, an analyst at eMarketer, a technology research company.

The tax burden will only rise as more and more cities begin to tax the internet to line their own pockets.

Source: ArmstrongEconomics.com

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