Proposed Louisiana sales tax may increase cost of Netflix, Hulu

Lauren Bale talks about the possibility of state taxes for streaming services.

NEW ORLEANS – In an effort to overcome budget shortfalls, Gov. John Bel Edwards is proposing a tax on internet streaming services.

Many people are cutting the cord to avoid paying high cable bills, but relying on services like Netflix and Hulu may get more expensive if the tax passes. 

One in five U.S. households cut the cord with cable last year. That adds up to more than 1.1 million households no longer watching traditional TV. As the number of people paying for cable drops, the number of Americans turning to streaming services continues to rise. Lawmakers are taking notice.

Edwards is not the first government official to propose an internet streaming tax. Chicago is currently being sued for charging a nine percent tax on video streaming and Pennsylvania is charging a six percent tax on everything from apps to downloads.

The Louisiana streaming tax proposal would be the same as the state's sales tax, now at five percent. The Governor's office said the streaming tax, as well as new taxes on several other goods, would generate around $200 million dollars each year.

"I think it's a really great idea and it's a small price to pay for streaming services especially considering that it's kind of considered a luxury good,” taxpayer Brennan Wong said.

However, not everyone agrees.

"It seems like it's a way to dig into others pockets that doesn't necessarily make sense,” Matthew Gooden countered.

Then there's the question of legality. Federal law says the government cannot tax the internet.

The Governor's office said in a statement:

“The taxation of services is a direct recommendation of the HCR 11 Task Force, a bipartisan group created by the legislature in 2016, to expand the sales tax base and allow for a reduction in rates,” said Dept. of Revenue Secretary Kimberly Robinson. “ With the fifth penny of the state sales tax rolling away that will mean less revenue for the state coffers.  The task force sees this as a viable option for increasing tax dollars and cleaning the remaining pennies of the sales tax.  The streaming services are a part of the proposal to tax digital products.  If you purchased a book or music CD at Barnes and Noble, you would pay sales tax on the purchase price.  The proposal would ensure sales tax is paid if the book or music CD is downloaded from a website electronically and delivered to a digital device.  The same would be true for renting a movie or streaming television.  There is no proposal to tax access to the internet; there is a federal moratorium on taxing internet access.  A service such as Netflix, that is delivered over the internet is not a tax on access to the internet.” 
 

© 2017 WWL-TV


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