Chicago, the third most populated city in the US, is to raise extra funds by charging a ‘cloud tax’ — taking an extra 9 per cent from the money raised through streaming services such as Netflix and Hulu.
The charge, which will also hit music streaming services such as Spotify, could make the city an extra $12 million a year, according to reports. The new levy will apply to all entertainment, including TV, films, music and games that are rented digitally. It will also apply to companies that lend people computing power through the cloud.
Local news reports suggest that the tax could be a way of making up lost revenues from ‘real’ shops — which used to pay taxes to the city, but have gone out of business as entertainment consumers have moved online.
The tax actually brings Chicago’s approach to Netflix in line with other forms of entertainment. The city charges an ‘amusement tax’ to citizens, taking money from the ticket price at cinemas and concerts, for instance.
The change has already been enacted but won’t come into effect until September 1st.