(Daily Mail)—The City of Chicago is being sued for allegedly attempting to sneak in a nine per cent ‘amusement tax’ on streaming sites like Netflix, Spotify and Amazon Prime.
A lawsuit filed against the Illinois city claims it had no legal right to bring in the levy which could lead to higher bills for residents.
The Liberty Justice Center (LJC) says Chicago’s finance department extended an existing tax to cover subscriptions for streaming music, TV shows and games rather than creating a new one, meaning it could pass through without a vote by the City Council.
The nine per cent tax will raise $12million and help tighten up the city’s finances, officials said.
But Jeffery Schwab, from the LJC, told the Chicago Tribune: ‘No aldermen voted on this tax. It never went before the Chicago City Council, which makes the so-called ‘Netflix tax’ an illegal tax.
‘If the city wants to tax internet-based streaming media services, then it should put the measure through the political process, and let Chicagoans have their voices heard through the democratic process.’
The non-profit group also claims the definition of ‘amusement’ does not include gaming and audio, so the tax would not be valid even if it had been voted through by the city’s legislature.
Chicago City Council’s legal department said it would fight the lawsuit.
Spokesman John Holden said: ‘The City has not yet seen the complaint, but we are confident that the ruling is a valid application of the existing amusement tax.’
The city would not be the first place to tax streaming sites such as Netflix, with Washington already charging a 52 per cent levy on monthly subscriptions to the website, Fox News reported.
Wyoming, Vermont and Mississippi residents pay extra tax on iTunes music while people from New York must pay 12 cents more to play Angry Birds.