Georgia is looking at becoming only the fourth state in the country to tax digital entertainment services such as Netflix, Spotify, e-Books and video games.
The proposed 4% tax would add 52 cents, or $6.24 annually, to Netflix’s $12.99 monthly plan. Similar taxes are already on the books in Hawaii, Washington and Pennsylvania. A 9% “amusement services” tax drafted by Chicago in 2015 was upheld last summer by a local circuit court. The ruling is under appeal.
Georgia, which initiated sales taxes for online purchases on Jan. 1, seeks to use the tax revenue for the construction of high-speed Internet service in rural areas. About 16% of rural households in the state reportedly lack broadband access.
“This is not a new tax,” Jay Powell, a Republican representative from Camilla and author of the bill, told the Atlanta Journal Constitution. “Technology is changing. The bottom line is, I’m getting movies, sports, news and all the things I’ve always gotten, but I’m getting them via a different medium, which is streaming services as opposed to cable TV.”
Traditional pay-TV and telecommunication services operating in Georgia currently pay fees ranging from 5% to 7%.
Newly-elected Republican Gov. Brian Kemp isn’t in favor of the tax. Perhaps mindful of Hollywood’s $1.5 billion annual spending in the state on movies and TV show productions (Netflix’s “Ozark” is filmed at Lake Lanier), Kemp, who championed President Trump’s corporate tax cut, said he would prefer alternative options.
“My first inclination is not to look at tax increases to pay for this,” Kemp told Georgia Public Broadcasting. “If we’re going to have some sort of offset, I’d be open to looking at that. I don’t know that raising taxes is the answer for me.”
Georgia’s 2019 legislative session ends in April.