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Bill To Exempt Netflix From Local Taxes Stalls

Local governments in California won’t be barred from taxing video-streaming services like Netflix and Hulu, at least for now. 

As more and more people “cut the cord” and rely only on streaming services, California cities and counties are worried about lost revenue from a tax that they impose on cable. 

Dozens of local governments are considering whether to broaden a utility user tax on cable companies to include video-streaming apps, under the principle that they offer the same product—TV and video. 

The tech industry has quickly risen in opposition, and Democratic Assemblyman Sebastian Ridley-Thomas proposed a five-year moratorium on any local tax on video-streaming services.

"It’s not bad that it would be taxed," Ridley-Thomas says. "It just needs to be taxed in a uniform way, and the consumer needs to appreciate, ‘Okay, I’m paying for this.’"

He says local governments deciding individually how to tax streaming services could force the companies to navigate through a hodge-podge of regulations.

The cable industry argues the bill is a giveaway to the tech industry.

"It’s picking winners and losers in a very competitive video market," Caroline McIntyre of the California Cable and Telecommunications Association told the Assembly Revenue and Taxation committee.. 

As other lawmakers indicated they would oppose the measure, Ridley-Thomas withdrew it Monday from consideration by the Assembly Revenue and Taxation committee.

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