Chicago Introduces ‘Cloud Tax’ For Streaming And Cloud Storage Services

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Consumers to be hit with 9 percent price hike as Chicago Department of Finance’s new legislation affects Netflix, Spotify

Chicago has this week introduced a ‘cloud tax’ law that will see services such as Netflix have to charge consumers more money for streaming shows.

The tax, reportedly made up of two rulings instigated by the city’s Department of Finance, affects companies providing “electronically delivered amusements” such as Spotify and Netflix and companies providing “nonpossessory computer leases” (effectively cloud storage) such as AWS and Microsoft’s Azure.

Basically, services are going to get charged more per hour for running their servers inside of city limits.

Nine percent

The laws whack an extra nine percent tax on top of what the companies already play, and it will be consumers who have to fork out, with Netflix telling The Verge that it is already planning on charging its Chicago customers extra.

cloudA Netflix spokesperson told The Verge: “Jurisdictions around the world, including the US, are trying to figure out ways to tax online services. This is one approach.”

For services, negating the tax would come as easy as relocating their services outside of the city, but that’s harder said than done for established companies.

The tax is an obvious response to the detrimental effect the ongoing shift from high street to online services is having on some on cities. A nationwide rollout of cloud taxes at varying rates would cause headaches for providers, especially considering tougher observing would have to be in place for where content is being consumed.

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