There has been some buzz in the industry lately about tax lawsuits being launched across the nation by city governments against three of the biggest streaming services – Netflix, Disney+ and Hulu.
For example, a town in North Texas called Grand Prairie is suing all three for using local public internet infrastructure for streaming. This is because they have done so without paying what the government describes as due franchise fees. What’s more similar lawsuits are being launched by Dallas, Plano and Frisco.
There has been a large change in the sources of tax revenue. Essentially, in Dallas, revenue from hotels which originated in occupancy taxes have gone down massively due to the pandemic. Furthermore, as consumers increasingly cut the cord, there has been a large dip in franchise fees paid by cable TV providers.
The stance upheld by Netflix is that both they and other streaming services should not be liable for franchise fees like cable and internet access providers. Instead, taxes should be paid by consumers.
A similar action was taken by Ashdown, Arkansas, but this case was thrown out by a federal district court judge in October, who said: ‘The Court finds the analogy offered by Hulu on point: whether a driver locks the car doors while driving does not affect whether the road taken is a public road.’