Pasadena Wades Into Debate On Streaming Levy

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Subscribers of streaming video services in Pasadena and other local cities could soon be taxed in the same way as cable TV customers. But then again, they might not.

After the City Manager’s Office sent out an email in late September saying subscribers of over-the-top video services such as Netflix and Hulu would be subject to the same 9.4 percent utility tax applied to cable TV customers, City Council members and residents made their stance on the issue known. And they aren’t happy.

Thanks to public backlash, the proposal is now on hold in the City Attorney’s Office, according to Pasadena City Councilman Tyron Hampton.

The City Manager’s Office sent out an update on Sept. 29, saying that over-the-top services would only be included in the utility tax after “a full and complete review of the matter,” according to the newsletter signed by City Manager Steve Mermell.

Paul Little, chief executive of the Pasadena Chamber of Commerce, said the city acted prematurely in extending the utility tax.

“A lot of questions still need to be answered,” he said.

Other local cities that apply a utility tax to cable TV customers include Glendale, Santa Monica, and Culver City. They are among the many cities and states across the country that have been looking for ways to tax cord-cutters.

Chicago last year became the first major city to enact a 9 percent “cloud tax” on digital entertainment services, which the city said would generate $12 million a year in revenue. The city considers the tariff an extension of an existing amusement tax covering entertainment activities, such as movie tickets and sporting events. In August, Pennsylvania extended its 6 percent sales tax to cover digital downloads and subscription services.

Because Pasadena would be adapting an existing tax – such as the one levied on cable subscribers – voters would not have to approve it.

But that doesn’t mean it will go unopposed.

“The internet is supposed to be free,” said Councilman Hampton, who said he would ask that the proposal be put up for a City Council vote if the city manager eventually approves it. “Cities should work more effectively to save money, not try to figure out how we can tax the residents.”

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