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Virginia House panel defeats proposal to create 'Netflix tax'

Virginia House panel defeats proposal to create 'Netflix tax'

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A Virginia lawmaker’s proposal to impose new taxes on Netflix, Spotify and other online streaming services ran into strong opposition Monday in a Virginia House of Delegates committee, which voted 20-0 to kill the bill.

Del. Vivian E. Watts, D-Fairfax, said her bill was an attempt to modernize the state’s communications sales and use tax that already applies to such services as landline and cellular telephones, cable television and satellite radio.

The legislation would apply the 5 percent communications tax to streaming services, adding about 55 cents to a standard $10.99 monthly Netflix bill.

Speaking to the House Finance Committee, Watts said her bill, estimated to generate an additional $7.9 million in revenue for the state, would make the state less dependent on income taxes and localities less dependent on real estate taxes. It would require apartment-dwellers, she said, to pay for “the services and support that society needs to give to all generations.”

“The best we can hope for is a fair tax structure,” Watts said.

Republicans were not convinced.

“You know, ‘Netflix and chill,’” Del. Tim Hugo, R-Fairfax, said on the House floor, referencing internet slang for a TV night that can lead to intimate activities. “Well, my Democratic friends say, ‘Netflix and tax.’”

“This is exactly one of the reasons that Virginia is becoming increasingly unpopular with the millennial generation,” said Del. Emily Brewer, R-Suffolk, 33, a newcomer to the House.

The two major organizations that represent the interest of local governments — the Virginia Municipal League and the Virginia Association of Counties — spoke in favor of the bill.

Virginia Municipal League representative Neal Menkes said that at Monday’s meeting, he had “yet to hear a pager go off,” referring to one of the disappearing technologies covered under the existing communications tax.

“Technology has changed, and that’s the intent of this bill,” Menkes said.

Representatives for wireless providers Verizon and T-Mobile spoke in opposition, arguing the bill could hurt low-income Virginians by extending the tax to prepaid cellphones.

Watts said the bill was not ready to pass in its current form, and she voted against her own legislation. But she asked colleagues to consider the idea as part of the state’s broader, long-term look at reforming its tax structure.

Robert Baratta, lobbyist for Dish Network, called the company’s Sling TV service an “innovative product in its infant stages.”

“If you tax it, you’ll kill it,” Baratta said.

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