When it comes to my television watching habits, I’m still a bit old school. I’ve yet to “cut the cord.” My television signal comes to me over traditional cable. Except it’s not, really. It’s actually a service that piggybacks off of my broadband internet system.
It’s relatively new technology available to those of us who live in areas that have contemporary internet connectivity. The transition was mostly seamless to consumers, with my provider the same as the older traditional “cable.” Even the bill looks mostly the same, with the same old taxes and embedded fees.
On my current bill there are the following charges:
▪ Georgia Local Video Facilities Fee: $.25
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▪ Georgia Local Video Service Franchise Fee: $7.76
▪ Regulatory Video Cost Recovery Charge: $.04 Georgia County Sales Tax: $.63
▪ Georgia State Sales Taxes: $1.26
That’s $9.94 in various taxes and recovery fees of taxes charged to my cable provider that I pay every month so that I can have the pleasure of watching adults scream at each other 24/7 on networks that bill themselves as “news.” If I were to switch over to one of the various streaming services that deliver a similar product, I could eliminate most if not all of the above fees. This includes services offered by my current provider.
Let’s be clear on that. I’m charged roughly $10 per month in taxes because of a slight variation in technology that delivers the service I receive. If I were to call the same company that delivers my “cable” and purchase one of their “streaming” bundles, they would still deliver my broadband internet service, but I could eliminate over $8 in the above fees. If I called one of their competitors that doesn’t have a physical presence in Georgia, I likely wouldn’t end up paying sales tax, either.
Tax policy doesn’t change as quickly as technology. I’m still taxed as if the shows I watch were delivered by a monopoly who pays my local government for the privilege of running wires in the ground.
I should note that I’m somewhat lucky to have these options. For too many in Georgia, broadband that can reliably deliver high definition video remains elusive. Georgia legislators are attempting to update yesterday’s tax code while addressing tomorrow’s technology.
The proposal is to add a 4 percent tax (the same rate as the state portion of sales taxes) to the streaming services that currently escape the state’s archaic tax structure. It would somewhat level the taxation playing field while also funding efforts to close Georgia’s digital divide.
Critics of course, are assailing the thought of “new” taxes. As my current cable bill shows, there is nothing new about these taxes. The tax code just hasn’t yet caught up with changes in the technology for how these services are delivered.
This is a constant struggle during a period of major technological disruption. Policy makers want to encourage progress, but they also must fund existing services. There also comes a point where the newer industries that are able to evade taxes enjoy a distinct cost advantage over the traditional providers who bear the burden of existing tax structure.
This isn’t new to services like Netflix, whose untaxed monthly subscription is just a couple of dollars more than I’m currently paying in taxes and recovery fees. The same argument has been made for Uber/Lyft versus taxi cabs, and Amazon versus traditional retailers.
With valuation in the tens or hundreds of billions of dollars, these are no longer “fledgling” companies. The older, less cool companies deserve a tax structure that allows them to compete on a level playing field with their newer, technology driven competitors.
The question shouldn’t be, “Should a new tax be levied on Netflix?” The question for Georgia’s policy makers should be “What is the proper tax structure and rate to levy on all forms of entertainment delivery services?” That is the question one must ask to avoid having the state pick winners and losers.