Netflix tax: Chicago to charge extra levy on streaming TV and music services

City could raise millions of dollars from adding an extra charge for the popular on-demand service

Telecity streams services like Netflix and Spotify (Getty)

Chicago is to raise extra funds by charging a “cloud tax” — taking an extra 9 per cent from the money raised popular streaming services like Netflix.

The charge, which will also hit streaming services like Spotify, could make the city an extra $12 million a year, the Chicago Sun-Times reports.

The new levy will apply to all entertainment, including TV, films, music and games that are rented digitally. It will also apply to companies that lend people computing power through the cloud.

Local news outlets suggested that the tax might be a way of making up lost revenues from real shops — which used to pay taxes to the city, but have gone out of business as entertainment consumers have moved online.

The tax actually brings Chicago’s approach to Netflix in line with other forms of entertainment. The city charges an “amusement tax” to citizens, taking money from the ticket price at cinemas and concerts, for instance.

The change has already been enacted but won’t come into action until September 1, so that companies can get ready for it. It will be applied to all customers who are resident in the city.