‘Netflix Tax’ Faces Lawsuit From Chicagoans

The so-called “Netflix Tax” is a kind of “amusement tax” that could force companies to raise the price of all Internet-related services offered by them in Chicago. Earlier it was thought that the people of Chicago would easily give in to paying the taxes, but that is not the case as the people have come out strongly in opposing this tax.

Not in favor of Chicago citizens

The Daily Dot informed readers that a group of Chicagoans argued that the Netflix Tax punishes them unfairly for being customers of many of the sites (Netflix, Amazon, Spotify), and that by pushing the tax, the city has overstepped its authority. On the basis of these arguments, the group has filed a lawsuit against the city. The lawsuit was filed on Sept. 9 in the Circuit Court of Cook County, Ill. The tax, if cleared, will not just apply to video streaming services like Netflix or Amazon but also to gaming services such as Xbox Live.

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The so-called Netflix tax also “unlawfully discriminates against electronic commerce because it imposes a higher tax rate on theatrical, musical, and cultural performances that are delivered through an online streaming service than it imposes on those same performances if they are consumed in person,” says the lawsuit.

A strong case against Netflix tax

A major claim made by the lawsuit is that some of services covered under the tax could be used anywhere, even outside the city, and therefore, the city’s amusement tax should not apply as it does not have the authority to make people pay for such services. Amazon Prime and Xbox Live offer their users features that don’t fit under the amusement banner, and this has been specifically highlighted by the lawsuit, which is popularly called “Da Lawsuit.” The former comes with free shipping, while the latter comes with cloud storage.

A major factor that led to the dissatisfaction among Chicagoans is the fact that the tax is poorly defined and therefore is not enforceable. The Netflix tax also lacks implementation as the comptroller of the city imposed it without getting the required approval from the city council. This indicates that “da lawsuit” actually has a strong case against the Netflix Tax.

In June, Chicago’s comptroller expanded the existing 9% tax on “amusement” activities, but the implementation has been postponed until Jan. 1.