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Residents Across California Hit With Netflix Tax

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The Pasadena city council is scrambling to make up lost tax revenue from residents ditching their cable and home phone lines. The proposed stop gap: a streaming video tax.

The idea, dubbed the “Netflix tax,” labels streaming video a utility, like water or electricity, and will allow the city to levy the tax.

According to the Pasadena Star-News, the city will charge a 9.4 percent utility user tax for video game and streaming TV services -- including Netflix, Hulu, and HBO Go -- to match the tax on tradition cable TV. The tax reportedly begins on Jan. 1.

“We will be taking a very close look at this,” Jon Coupal, president of the Howard Jarvis Taxpayers Association, said of the tax. “If we determine this is an extension of an existing tax, then under the [state] Constitution, they need voter approval. They can put as much lipstick on this pig as they want, but the pig is still a tax increase.”

“There are a lot of things that are done through the internet that are taxed,” countered Matthew Hawkesworth, Pasadena Finance Director. “Pasadena isn’t unique in this. There are many, many cities considering it.”

CBS News reports that some 40 other California cities have similar taxes.

“People are going to wake up and see tax line items on their Netflix and Hulu bill and they are not going to be happy,” said Robert Callahan, director of the Internet Association. “Utilities are water, and electricity, and sewer and all sorts of other utilities. Websites and apps don’t fit that mold whatsoever.”

Tyrone Hampton, a Pasadena city councilman, agrees.

“Cable has been a hardship for many families and now we’re going to add a hardship to them,” Hampton said. “Next we’ll be taxing you for streaming music on Pandora. This is ridiculous.”

Sources: CBS News, Pasadena Star-News / Photo credit: Esther Vargas/Flickr

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