On Monday, the Board of Trustees of the Village of East Dundee voted to approve a 5% tax on streaming services like Netflix, Disney+, Hulu, etc.
East Dundee joins Chicago and Evanston as municipalities that have decided to treat streaming services as being akin to cable or satellite television, the usage of which has plunged in recent years.
Citing the need to diversify its revenue streams, the Village expanded its existing “amusement tax” definition to include “any video streaming, audio streaming or remotely-accessed online games made available to persons on a rental or subscription basis, but not transactions where the person pays for the rights of permanent use, where the right of access is purchased by any person with a billing address in the Village of East Dundee.”
According to a summary of the amendment prepared by city staff, “reliance on sales tax as the primary source of Village revenue” has led to uncertainty and lower credit ratings for the Village.
“Sales tax can ebb and flow with economic circumstances and the heavy reliance on it is one of several reasons the Village’s credit rating is below A (currently Baa1 – stable, down from A1 in 2012). Continuing efforts to diversify revenue will result in an increase in our credit rating as well as an overall improved fiscal management policy. Balancing the services provided to the community with a diversified revenue sources by which the Village can pay for said services provides stability and lower borrowing costs, both of which benefit the residents of East Dundee.”
The tax will be effective beginning July 1, 2022.
