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Netflix & Spotify To Be Taxed In Chicago

Netflix & Spotify To Be Taxed In Chicago
Netflix headquarters in Los Gatos, California, Tuesday, July 8, 2014. (Paul Sakuma Photography) Netflix website


Netflix & Spotify To Be Taxed In Chicago

It turns out that it is going to be more expensive to watch your favorite TV shows and movies on Netflix. That is, if you are streaming it in Chicago. Not to mention it would be a little more expensive to stream music from Spotify, too. This is because effective July 1, the City of Chicago will be charging its residents an additional 9% tax for what is called an amusement tax.

In a copy of the City of Chicago’s Department of Finance Ruling obtained by Morning News USA, it has been ruled that amusement tax will now cover “any paid television programming, whether transmitted by wire, cable, fibex optics, laser, microwave, radio, satellite or similar means.”

With regard to taxability, the rule details that “the amusement tax applies to charges paid for the privilege to witness, view or participate in an amusement. This includes not only charges paid for the privilege to witness, view or participate in amusements in person but also charges paid for the privilege to witness, view or participate in amusements that are delivered electronically.”

The rule has further clarified what kind of charges paid the amusement tax covers. According to the document, it will include charges paid for watching electronically delivered television shows, movies or videos, music and games (“on-line or otherwise”). Moreover, the ruling states that “the amusement tax will apply to customers whose residential street address or primary business street address is in Chicago, as reflected by their credit card billing address, zip code or other reliable information.”

Meanwhile, the Chicago Tribune reports that the new ruling on amusement tax is expected to bring in an additional $12 million every year for the City of Chicago. This also may reflect a step the city is taking to close its widening budget gap.

A report done by Nuveen Asset Management earlier this year stated, “Chicago Mayor Rahm Emanuel’s next four years in office will entail politically difficult decisions related to how best to keep the city’s fiscal ship from sinking.”

Recently, Moody’s Investor Service has also downgraded Chicago’s credit rating to a Baa2, combined with a negative outlook. This is mainly because of Chicago’s $20.1 billion unfunded liability in pensions along with related budget pressures.

As for Netflix, the Chicago Tribune has reported that a Netflix spokeswoman has confirmed that the said additional cost will be passed on to its subscribers. Meanwhile, businesses will reportedly have until September 1 to begin paying the taxes.

About Jennifer Ong

Jennifer Ong has been covering and writing stories since 1998. Over the years, she has worked on stories on business, health, lifestyle, entertainment and travel. She has also previously written shows for television. When she's not on the job, she enjoys wine and Formula 1.

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