Governments are always on the lookout for new revenue, but state and local governments in the U.S. are particularly hungry these days.
The rise in online shopping and the decline of purchases of traditional media, such as DVDs and CDs, has led to sluggish tax receipt growth in many jurisdictions, and now lawmakers are turning to new web-based services for relief. Bloomberg News compiled the latest attempts by states and localities to raise revenue from new services and found the taxman going after Netflix (NFLX), Airbnb, and even the experimental arts festival Burning Man.
According to the report: “In June, Chicago decided that its 9 percent ‘amusement tax’ should cover Netflix, Spotify, Hulu, Amazon Prime, and other streaming services, to help make up for sales tax revenue lost to falling DVD and CD sales.” Chicago is following the lead of foreign governments like Australia, which have instituted streaming taxes.
Airbnb is another target, as the service has drawn demand from hotels—a big source of revenue for state and local governments. Washington State, for instance, started collecting an Airbnb tax this month.
Even Burning Man isn’t free from the long reach of the taxman. This month, the state of Nevada changed its concession sales tax to an admission tax to capture more revenue from events like Burning Man and the Electric Daisy Carnival.