Calling Streaming Video a “Utility,” This City Just Added a “Netflix Tax”

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A city in California has upset Netflix users and other video streamers with a controversial tax.

Pasadena city council recently announced a steep 9.4% tax on streaming video, which it arbitrarily decided to classify as a utility. The council defended the decision, saying the tax—which was approved seemingly out of nowhere—was necessary to make up for lost tax revenue from those ditching traditional cable television and landline phones.

Citizens are finding out about the tax not from their city but through their Netflix bills, which is making them even more angry.

Indeed, Pasadena may be crossing a line here: the government doesn’t allow tax on the internet, and things like streaming video do not fall under the category of utilities. Yet the California city is not alone in its desperation: Chicago and Pennsylvania both attempted the same thing.

Chicago is being sued already, while Pasadena has decided to freeze the tax in the face of opposition. Potential legal bills could quickly negate revenue from the tax.

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