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A California bill that would have blocked local governments from taxing Netflix, Hulu and other streaming video services is done for the year.
Assemblyman Sebastian Ridley-Thomas (D-Los Angeles) wanted to stop cities and counties from taxing users of such services until 2023, which would have given the industry and local governments time to figure out how a taxation system would work, Ridley-Thomas said.
Currently, many local governments tax cable-television subscribers. Ridley-Thomas aimed to stop cities from extending that tax to streaming services to foster growth in the industry and deal with complex legal and taxation issues as the streaming services grow in popularity.
“This is a critical discussion in my mind,” Ridley-Thomas said at an Assembly committee hearing Monday.
But his bill came under intense opposition from local governments and the cable industry at the committee hearing. Cities and counties were worried that the bill would have blocked their ability to raise revenue, and cable companies believed the measure would have discriminated against their industry.
“It’s picking winners and losers in a very competitive video market,” said Carolyn McIntyre, president of the California Cable & Telecommunications Assn.
Ridley-Thomas agreed to reconsider the bill for next year after it became clear that he might not have the support necessary from his colleagues on the Assembly Committee on Revenue and Taxation.
Last year, the city of Pasadena considered extending its utility tax to Netflix and other streaming services, but backed down after an outcry. Pasadena Mayor Terry Tornek recently estimated the city could bring in $2.3 million a year if it decided to tax the services.
Many other cities including San Bernardino, Glendale, Santa Monica, Culver City and Pico Rivera also are weighing extending the tax, according to a committee analysis of the bill.
Currently, roughly one-fourth of Californians pay a tax on cable television service, according to The California Local Government Finance Almanac.