The California State Assembly could soon consider a bill to prohibit local taxes on video streaming services.
The bill (AB 252) would negate a local government's right to tax such a service, claiming the use of streaming video is a statewide matter. The bill would also define a streaming video as "video content sent in compressed form over the Internet and displayed by the viewer in real time for a fee on a subscription basis."
The tax prohibition would "temporarily prevent local governments from imposing a complicated and onerous patchwork of different taxes on video streaming services," according to a statement from the bill's author, Assemblymember Sebastian Ridley-Thomas, D-Los Angeles.
Dozens of cities have considered imposing a tax on video streaming technology. Pasadena led the way when the city's voters approved a utility tax in 2008 that could be applied to all companies providing the service. The city of Pasadena made a statement opposing the bill: "Tax policy should be fundamentally technology neutral and applied based on services provided, not the technology used."
The Computing Technology Industry Association (CompTIA) supports the bill based on its opinion that streaming is not a utility, according to the industry group's commentary in the bill analysis.
Other states and localities have grappled with the tax issues surrounding video streaming. Arizona classified streaming video as a product being rented and in order to collect applicable taxes. Texas law uses a broad definition of cable to include services such as Netflix or Hulu. Louisiana, meanwhile, began suing Netflix in 2013 for unpaid taxes in its St. Charles Parish, a local government.
AB 252 was set to be heard in committee on March 13 but is currently being revised by Ridley-Thomas and its 10 co-authors.
