Any free society would not imagine to pay a form of local tax to stream a simple movie on a service such as Netflix and Spotify, but the city of Chicago has in their wisdom invented such a cloud-based service tax, claiming that it's akin to paying for live entertainment tickets; although in real terms it's clearly not! .
Of course as in most cases in America these days there was absolutely no debate or public hearing over this city "cloud tax" which translates to 9% tax on streaming entertainment like Netflix.
The city administrators in Chicago even had the audacity to claim that the tax is not actually new, as it's a form of clarification and not an expansion of 2 taxes that have long been in effect as follows:
- Personal Property Lease Transaction Tax
- Amusement Tax (traditionally been tacked onto tickets for concerts & sporting events)
Netflix reportedly plans to pass the tax on cloud based services, duly onto its unsuspecting customers.
The tax is expected on paper at least to raise $12 million USD in revenue for Chicago, a city which is struggling to balance the books. The cloud tax is sadly for the residents of Chicago already in effect and it has caught a number of people off guard.
Interestingly, the high tech community is collaborating to consider a legal challenge to Chicago's tax on streaming and database services, which is obviously a "nickel-and-dime" approach that is paradoxically out of step with the rest of the world.
One wonders what they will Tax next? Perhaps Facebook, Twitter, Google Search or the air, sorry they already did that by taxing streaming in the air!
Calling on all readers to give their views on this?