Lawmakers Around the World Want Streaming Mega-companies to Pay Local Taxes

New local and national rules requiring streaming platforms to pay local taxes have emerged, at a time when the companies are coping with declining subscribers, increasing production costs, and an uncertain economic climate, according to The Hollywood Reporter.

Canadian Bill C-11, for instance, will compel foreign streamers and social media platforms to subsidize and promote local Canadian content, treating them like local networks.

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

Previously, foreign streamers had avoided taxation in Canada by not hiring local employees and running projects out of the U.S. But when companies such as Netflix and Facebook established Toronto headquarters, they started to adhere to local tax laws, such as the goods and services tax paid by consumers.

These foreign players grew larger than the local ones, though, prompting calls to regulate them as if they were, in fact, local themselves.

Similarly, American and European governments are developing laws aimed at getting streamers to contribute to the tax base in cash-strapped cities. In New York, lawmakers even floated the idea of introducing a new 4% state sales tax on streaming services to avoid raising New York City subway fares. The measure could raise more than $100 million a year, its proponents said, THR reported.

In local municipalities including Maple Heights, Ohio; Reno, Nevada; and New Boston, Texas, lawmakers want online platforms to pay fees for taking advantage of public infrastructure. The streaming companies have countered in court, claiming that they don’t use public wires, cables, or facilities, and therefore should not have to pay fees for them.

And in the U.K., a draft media bill would force online services to follow the code of conduct set out by national regulator Ofcom, whose rules regarding harmful material have applied to the national broadcasters for decades. If streamers break the code, they could be fined up to $312,000.

The companies don’t like the idea of national governments regulating how they should spend their money. But for governments, the enormous size of the digital companies in an increasingly digital economy warrants regulation.