California State Assembly

Assembly Revenue and Taxation Committee

1315 10th St.

Sacramento, CA 95814

Dear Assembly Member,

On behalf of the 256,945 members and supporters of the Council for Citizens Against Government Waste in the state of California, I urge you to support AB 252, the Streaming Tax Relief of Entertainment and Movies Act (STREAM), which prohibits cities and counties from imposing any tax on video streaming services and safeguards high-tech innovation in California.

More than 45 cities in California, including Glendale, Menlo Park, Pasadena, and Sacramento, are considering changes to their utility tax codes in order to implement a streaming video tax on services such as Netflix and Hulu.  This type of egregious taxation opens the door to double taxation, since residents in California would be taxed on a combination of cable, internet, and/or video streaming services.

Video streaming companies are entertainment providers, not utilities, and therefore should not be subject to utility user taxes.  Imposing such a tax on entertainment services like Netflix and Hulu will set a dangerous precedent for which goods and services can be taxed simply by making changes to the utility tax code.

The legal objection to these taxes is based on the passage of Proposition 218 in 1996, which prevents cities and counties from raising taxes without voter approval.  The video streaming tax is likely in violation of the Internet Tax Freedom Act, which imposed a strict ban on federal, state and local governments from taxing internet access and from imposing discriminatory internet-only taxes.  

AB 252 promotes uniformity in access throughout the state to video streaming services as being a matter of statewide concern, not a city or county concern.  Therefore, I ask you to protect Californian consumers and taxpayers by supporting AB 252.  Thank you for your consideration.

Sincerely,

Tom Schatz

President, CCAGW