Internet users are already taxed for their use of the Internet through their Internet Service providers and they pay state sales tax on many services. Now, local governments want to tax them extra for the “privilege to witness, view or participate in an amusement.”
Yesterday, July 1, the city of Chicago decided to start taxing residents 9-percent tax for being “patrons of amusement.” Netflix will have to add the tax to its subscription prices; as will many other paid subscription/service companies.
The last time Netflix increased pricing, a lot of the subscribers turned into pirates and Netflix lost a lot of money until it created its tiered plans. Some experts believe that Chicago’s decision will do nothing more than convince people who are currently paying for their “amusements” to drop their subscriptions and turn to pirated ones. Then, Chicago would not get the tax revenues it had hoped to get from creating this tax.
Of course, some people fear that this is merely the beginning of local and state governments attempting to tax every aspect of Internet use. Some fear that eventually businesses online will be taxed for the “privilege” of being able to offer services over the Internet. If that happens, users can say goodbye to free “amusements” of any sort because the companies would have to pass on the costs to them.
Lime Crime reports that there has been no federal response to Chicago’s plan.