East Dundee residents to start paying tax on Netflix, Hulu, other streaming services

East Dundee residents can expect to pay a tax on streaming services like Netflix or Hulu.

Village trustees Monday voted 4-2 to approve the 5% entertainment tax as part of its upcoming budget. The tax would take effect July 1.

Village officials budgeted $25,000 in revenue from the new tax, which would tack 77 cents onto a standard monthly Netflix subscription costing $15.49 or 15 cents to an Amazon video rental costing $2.99.

"This is a modern version of the original telecommunication tax," Village Administrator Erika Storlie said, adding that the village has seen a decrease in taxes collected from cable subscribers as more people drop cable television in favor or streaming services.

"This is one of those items where the taxes have to catch up with the technology," Village Attorney Lance Molina said.

Trustee Scott Kunze, however, questioned the tax saying the village was not providing a service to tax.

"We're just saying we're missing money that we used to get from cable, and now it's going to streaming," Kunze said. "I don't see a justification to tax."

Chicago adopted an entertainment tax charging 9% on streaming services in 2015. In March, a judge dismissed a lawsuit filed by Apple Inc. challenging the tax. Though Apple's complaint was dismissed, the judge left the door open for Apple to file an amended complaint.

Evanston, where Storlie served as city manager before coming to East Dundee, has charged a 5% entertainment tax on streaming services since October 2020.