Netflix, Hulu argue they aren’t ‘video service providers’ in Ohio Supreme Court
cleveland.comThis seems like a money-grab from a municipality. As people engage in cord-cutting behavior, the municipality can't excise it's tax from the cable companies (people who dig cables). So they are looking to make up for the shortfall by going after Netflix and Hulu.
I'm struggling to understand why it's a bad thing that a municipality wants to levy taxes. How do you expect these places to pay for infrastructure and maintenance and public services?
The taxes are levied on "video service providers" in order for those providers to secure the right-of-way to lay cable. Essentially, it's a tax to pay for the providers using municipal infrastructure (streets, utility poles), burying it if necessary, etc - for the purposes of laying new cable.
Netflix and Hulu don't own or lay cable, they don't need right-of-way. As I understand it, the tax is already levied on cable providers and ISPs. I don't think it's good or bad, because Netflix/Hulu will just charge customers in those cities more (or refuse service).
It's a bit dumb to search for a legal technicality in the state law to raise taxes and avoid public scrutiny, if the cities need money from their residents they can raise property taxes (or cut services). But my guess is that is less politically expedient. However the tax payers now have to foot the bill for the lawsuit, so who really wins?
And when these companies buy their way out of paying taxes for infrastructure, were supposed to clap and say "well done ole boys"
> But my guess is that is less politically expedient. However the tax payers now have to foot the bill for the lawsuit, so who really wins?
Lawyers. Only lawyers win in prolonged legal and political battles.
Looks straight forward. I’m unfamiliar with Ohio specifically but the article lays it out: they’re subject to the State’s sales tax.
This, Hulu and Netflix argue, is a mutually exclusive tax with the franchise fee that the municipality wants to levy, a tax specifically targeted at cable companies that actually lay cable and therefore the State would actually lose money if they were reclassified from their current business status under State law.
It makes sense, and this does look like a money-grab. It can pay for its infrastructure out of its share of sales tax revenue or whatever other sources of revenue they have, raise those, or levy a new tax that specifically targets the type of business Ohio apparently classifies Hulu and Netflix to be under their State’s laws: a “specified digital products”, whatever that means, but I’m betting they don’t want to because doing so would hit more than Netflix and Hulu and bring more big players into the political fight.
I'm struggling to understand why it's a bad thing that a municipality wants to levy taxes.
I'm struggling to find where OP said any such thing.
> money-grab
Connotatively negative word.
And I would agree that it is true that this is a money-grab in this particular case. However, as one who is happy pay municipal taxes most of the time, I don't think OP was stating that this is the case in general. But when one revenue source dries up, and an entity tries to make up the shortfall by dipping into the (arguably, which is what the case is about) unrelated pockets of Netflix customers, then yeah, a negative word or two might be in order.
They’re trying to double dip: they want to be able to use a municipal levy despite Netflix, etc already paying sales tax.
One of the defenses is that if the levy is correct, then they should not owe sales taxes, which they point out with reduce the states income. The goal of the municipality is to circumvent the state government by claiming a municipal tax is owed as well.
Be careful what you wish for, because if streaming video requires paying taxes there can be no free service streaming video. And that is without looking at the absurd costs of complying with a patchwork of municipal laws.
They should levy taxes on people living in the municipality, not a company thousands of miles away that is not using their resources in any way whatsoever.
They’re attempting to do just that. This tax would be paid by the consumer, just as state sales taxes are. However companies must keep track of the relevant taxes for each consumer, charge them appropriately, and remit that to the appropriate government. It gets complicated real fast.
Honestly I think everyone involved is making good points and I don’t think it’s as obvious as Netlifx / Hulu want it to be. I think Comcast would get exactly nowhere arguing they shouldn’t have to pay the 5% fee if they switched their cable boxes to be “streaming boxes” that went over the internet and separated out the internet and content departments. And there becomes a point where all that digging is there to support a few supermassive video streaming services. And the last mile ISPs get put in a “we get charged because we have to dig but we only have to dig because of these streaming services.”
If you don’t think this tax should be levied at all then that’s all fine and dandy but given the tax I think Ohio has a much stronger case than “obviously wrong, dismissed.”
> It would be absurd to call Netflix and Hulu video service providers and could have extreme consequences, Garre said.
> “It would mean that anyone who streams content over the internet – whether it’s a high school that streams educational programs or athletic events or a church that may stream programs or this court itself, which is streaming this argument live today – would be a video service provider under the act, potentially subject to the franchising fee requirements,” Garre said.
This only seems controversial because we're reading the colloquial meaning of 'video service provider' rather than the text of the bill.
The text of the bill applies to companies who >lay fiber or cable through the public right of way<
Hulu and Netflix do not do those things, so why are they being caught up in this?
It seems the solution is to create or increase the franchise fees on ISPs that use municipal infrastructure.