There’s a lot to love about Chicago, from its music scene to its food to its sports, and almost everything in between. But when it comes to getting down to some binge-watching on Netflix, the city is standing out for all the wrong reasons, thanks to the recent ruling that Netflix subscriptions, along with other Internet-based enjoyments, would get taxed. The people are fighting back, though, with a lawsuit claiming that the recently established taxes are illegal.
The tax, which is being lumped into the city’s pre-existing “amusement tax,” extends its former reach to take 9% of subscriptions for streaming music (like Spotify), rental movies, TV shows and games. And though the point of it all is to aid in knocking the city’s debt down – city officials expect around $12 million to be brought in from the taxes – the nonprofit Liberty Justice Center doesn’t believe there’s any lawful ground for it to stand on. For one, the tax was enacted by the city’s Comptroller and wasn’t put to any kind of vote. According to the suit:
The Comptroller has exceeded his authority under the ordinance by issuing a rule that imposes a new tax that the City Council did not authorize in enacting the Amusement Tax. No aldermen voted on this tax. It never went to the Chicago City Council, which makes the so-called ‘Netflix tax’ an illegal tax. If the city wants to tax Internet-based streaming media services, then it should put the measure through the political process, and let Chicagoans have their voices heard through the democratic process.
But that’s not all. According to the Chicago Tribune, it’s also being argued that the new tax doesn’t fall in line with the federal Internet Freedom Tax Act. This is based on the fact that streaming services are being taxed at a higher rate than some entertainment services within the city that aren’t provided online.
As far as compensation goes, the plaintiffs are looking to be rewarded for past tax fees that have already been paid, and they’re seeking an injunction moving forward. To be expected, the city’s Law Department isn’t just going to take this lawsuit laying down (while possibly waiting for Jessica Jones to be released in November). They will apparently fight the suit with all they’ve got, but also say that the City hasn’t yet seen the complaint.
We know that most Netflix subscribers are happy with the current prices they’re paying for the service, and though many would complain if the company decided to raise them, I don’t think anyone would try to sue them. Here’s hoping this mess gets cleared up fairly soon, whichever way it (Chica)goes.