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Chicago to Tax Streaming Services Beginning Sept. 1

6 Jul, 2015 By: Erik Gruenwedel

If commerce and entertainment are going digital, it figures the tax man isn’t far behind.

Beginning Sept. 1, Chicago will become one of the first major metropolitan cities to impose a city tax on cloud-based streaming services, including music and video. Think Netflix, Amazon Prime Instant Video, Hulu Plus, Sling TV, HBO Now, CBS All Access and PlayStation Vue, among others.

The city’s existing 9% amusement tax for ballparks and theaters will now incorporate “electronically delivered amusements” and “non-possessory computer leases,” according to the Chicago Tribune.

While some tech folks are crying foul, the tax makes economic sense as brick-and-mortar businesses decline due to e-commerce and increasing numbers of multichannel video program distributors losing subscribers to cord cutting.

While people accustomed to the “world of free” online may gripe, the 9% cloud tax pales in comparison to city, state and federal fees levied on bundled-package subscribers and collected by cable operators.

In New York, a monthly cable/phone bill from Time Warner Cable lists no less than 15 surcharges, fees and taxes. The extra charges include: Federal Excise Tax, Federal Universal Service Fund Surcharge, Regulatory Recovery Fee (Federal), FCC Regulatory Fee (voice), Federal Subscriber Line Charge, E911 Surcharge, Local Gross Revenue Recovery Fee, Local Number Portability Fee, Local Sales Tax, Local Telecommunications Excise Tax, Metropolitan Commuter Transportation District, Regulatory Recovery Fee, School District Sales and Use Tax, State Sales Tax and State Telecommunications Excise Tax.

Chicago expects to generate about $12 million annually with the new cloud tax.


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