Like it or not, your monthly Netflix bill could go up anywhere from a dollar to a few dollars a month soon, thanks to state governments increasingly hungry for new tax revenue.
Even worse: It’s not just Netflix subscriptions that are in the crosshairs here. Already, around half of all states in the US levy some degree of sales tax on their residents’ subscriptions to streaming services like Hulu, Netflix, Amazon Prime, and Spotify. And the states that don’t might start doing so in the near future. To cite just a few examples, state legislatures in Utah, Massachusetts, Illinois, Kansas, and Maine are all studying this issue at the moment, something that Michael Mazerov, senior fellow at the Center on Budget and Policy Priorities, describes as a “fast-moving policy development — bills are constantly being introduced on this.”
That’s according to a new report Monday which notes that this is an inevitability, as the economy transitions away from an emphasis on physical retail and transactions to more of a digitally-based ecosystem. What’s worrisome for consumers, though, is the fact that state sales taxes are generally around 6% on average today. Which, by itself, is obviously not a lot. That would add almost $1 to Netflix’s Premium subscription tier, which is currently priced at $16/month.
Not a lot — until you stop and remember how many streaming services you’re subscribed to. According to CNBC’s estimates Monday, a state levying a new 6% sales tax on streaming services would mean that if you’re currently subscribed to Netflix, Hulu, Disney+, HBO Now, and Amazon Prime Video, then you’re looking at paying an extra $4/month — not to mention the fact that the collective price of those subscriptions would jump to about $63/month.
In a budget address last year, Connecticut governor Ned Lamont (who supports the idea of taxing streaming services), said that: “Our current sales tax is designed for a Sears Roebuck economy driven by over-the-counter sales. Today we live in an Amazon economy, which is driven by e-commerce, digital downloads, and consumer services.
“Movie theaters charge a tax, and Netflix should be treated the same.”
Back in 2018 was the first time that more US consumers subscribed to at least one video streaming service than paid for traditional cable TV. That’s according to a Deloitte report noting the milestone, and it provides yet another reason for state lawmakers to want to take a look at squeezing whatever revenue they can out of all those monthly streaming bills that are escaping taxation — at least, for the moment.