A 'Netflix tax' is about to make online streaming more expensive

Netflix users who already pay to access the service could be about to see their monthly price plans rise, as some US states consider a tax on streaming content online.

The levy is being considered in states across the US, which could see taxes on subscription fees for the likes of Netflix, Amazon Prime Video and Hulu of around $1 per month each.

The tax, which would allow local governments to tap into another revenue stream, is already due to come into effect in Chicago, Pennsylvania and Florida, but now it is reported that California, Alabama, Louisiana and West Virginia are also considering the added fee.

Municipal governments that are pushing for the tax defend the initiative by claiming that online streaming is essentially the same as video rental from bygone brick and mortar stores such as Blockbuster Video, which were taxed at the time.

"We don't have Blockbuster Video anymore. We were charging them tax, that's got replaced by streaming services like Netflix, so for us it's really just replacing one tax with another for the exact same service'," Larry Downes, project director of Georgetown University's Centre for Business and Public Policy, explained to USA Today.

Also, as streaming services become a popular alternative to traditional pay TV, subscriber numbers are falling, which means governments are seeing fewer customers to tax. Targeting the online market could be a way to regain that lost capital.

"When you see the sales tax base dwindling like this, it is understandable for lawmakers to get together and say, 'Is there a way that we can expand this?" the article quoted John Buhl of the Tax Foundation.

With many consumers signed up to more than one video streaming service the $1 tax could easy add up to over $50 a year, which, when added to the subscription fees they already pay to access the content, is a significant amount.

Consumer rights groups have voiced their opposition to the tax, claiming it can "deter innovation" and that streaming services are being discriminated against, citing the Internet Tax Freedom Act of 1998 whereby federal, state and local governments are barred from imposing internet-only taxes.

Netflix, while not openly critical of the levy, has expressed some concern it could become another household bill for its 50 million-plus US subscriber base alongside utilities.

"Our view is that it is a dangerous precedent to start taxing Internet apps and websites using laws intended for utilities like water and electricity," Netfilx spokesman Jonathan Friedland told USA Today.

While a number of states are already in the process of adjusting its entertainment taxes to include the likes of online streaming and online gaming, the proposal to tax Netflix was thrown out in Kentucky as it was deemed the service was not the same a traditional pay-TV.

Plans to introduce the tax in other countries outside the US with large subscriber bases such as the UK or Australia have not been revealed.