Quantcast

City on verge of taxing streaming services

netflix_logo_digitalvideo_1

The fees Evanston residents pay for Netflix, HBO and other online streaming services will rise 5% soon, assuming aldermen give final approval next month to a tax on those services.

The measure was introduced at Tuesday’s City Council meeting on a 6-3 vote.

In a memo supporting the new tax, Hitesh Desai, the city’s chief financial officer, said the city hopes to raise at least $115,000 from the new levy.

He said that because of the COVID-19 pandemic, revenue from the city’s existing tax on in-person amusement events is expected to fall dramatically short of the budgeted $430,000.

Interim City Manager Erika Storlie said the city has suffered a dramatic reduction in revenue from the tax on traditional phone services as people switched to cell phones, and she anticipates a similar reduction in revenue from the tax on cable television services as residents increasingly cut the cord and turn to online streaming services instead.

She said Chicago imposed a similar tax on streaming services at a 9% rate about a year ago and that it has survived legal challenges.

The proposed ordinance would also modify the city’s 5% tax on in-person amusement events, eliminating the tax at venues, other than movie theaters, that have a capacity of less than 100 people.

And it would establish a new rate of 7% on amusement events with a capacity of over 1,501 people.

Desai said the higher rate would address the greater impact on city services creating by large events. It’s aimed at events that may be held at Northwestern University’s Welsh Ryan Arena under recently approved changes to the city code.

Alderman Cicely Fleming, 9th Ward, said she considered it a poor choice to impose a new tax at a time when people are hurting financially.

Aldeman Peter Braithwaite, 2nd Ward, requested that the staff address how the change in the tax on in-person events might affect concerts such as the Out of Space events.

Aldeman Tom Suffredin, 6th Ward, joined Braithwaite and Fleming in voting against introduction of the ordinance.

Related story

Don’t laugh! Amusement tax may expand (1/27/20)

Editors’ Picks