Netflix tax could prevent New York subway fares from rising

Lawmakers are considering a 4% state sales tax on streaming services to avoid raising NYC MTA fares.

Quick, what’s the connection between Netflix and the New York City subway? Apart from “watching Netflix on your phone while you go to work”, the correct answer is “maybe soon one will pay for the other”.

Grayling The Wall Street Journal, New York state lawmakers are considering incorporating a state sales tax on streaming services like Netflix, HBO Max, Hulu and others into the state’s new budget. Based on the proposed version of the budget handed in The New York State Assembly would impose a 4 percent state sales tax on digital streaming products, which, for example, would add a $0.80 fee to Netflix’s $19.99-a-month premium subscription.

A Netflix representative told IndieWire that New York already has a 4 percent local sales tax on Netflix subscribers. This wouldn’t be the first state to tax someone’s streaming bill; Florida, North Carolina, Pennsylvania and Washington are among the two dozen states that impose a sales tax on streamers. The rationale for the proposed tax is unique in that it is reportedly being floated in New York state budget debates to prevent fare increases on the Metropolitan Transportation Authority’s New York City subway systems.

The Assembly projects that a 4 percent state sales tax on streamers could raise more than $100 million annually. Other ideas to deal with the MTA shortfall could include raising corporate taxes, package delivery fees, or surcharging Ubers and Lyfts (New Yorkers say car service fees are already high enough).

Last year, according to the MTA’s forecast, it would have to face 2.5 billion dollars budget deficit The organization approved the 2023 budget, which assumes the MTA would receive $600 million from other levels of government and raise subway fares from $2.75 to $3, a 5.5 percent increase. The amount of new support for the operation of MTA’s subways and buses is expected to rise to over 1 billion dollars in 2024.

Gov. Kathy Hochul originally planned to block the fare hike with contributions from New York City government and a proposed increase in payroll taxes that was projected to generate $700 million. But with state lawmakers expected to reject Hochul’s plan, Democrats in the state legislature have proposed several alternatives.

The current New York State budget expires on March 31st. According to the state constitution, the new budget must be approved the next day, April 1.

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