Pennsylvania Imposes Statewide 'Netflix Tax'

Josh Luckenbaugh | August 2, 2016
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Residents of Pennsylvania began paying a little extra to watch their favorite shows online Monday, as a new state "revenue package" went into effect which extended the state's six percent sales tax to digital downloads and online subscription services, such as Netflix and Hulu.

Anyone whose account contains a Pennsylvania billing address will be hit with the so-called "Netflix tax", which covers such things as music, e-books, apps and online games. Some products are exempt, such as newspaper and magazine subscriptions, digital versions of the Bible and textbooks.

The sales tax extension is part of a revenue package designed to balance out the state budget and avoid a lawsuit and bond downgrade. Reportedly the package, which also includes a $1-per-pack cigarette tax increase, will fill a $1.3 billion hole in Pennsylvania's $31.5 billion state budget.

The "Netflix tax" alone is projected to bring in almost $47 million of additional revenue. A similar tax was placed on the citizens of Chicago last year, which at the time, lawmakers said would bring in almost $12 million annually to the city.

Naturally, the decision to tax Netflix has angered many Pennsylvanians, particularly one woman who specifically blamed state governor Tom Wolf [Warning: Strong Language]:

Unfortunately, legislation like the "Netflix tax" will probably become more common, as consumers continue to purchase digital products as opposed to physical objects like DVDs and CDs. 

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