Vermont Weighs Streaming Tax as Cord Cutting Eats into Public TV Funds — Is Your State Next?
Streamers like Netflix oppose the move, saying the tax could force them to raise prices.
As the 2024 tax filing deadline in the United States nears, most individuals are worried about how to maximize their returns. But streamers like Netflix, Disney+, Max and Prime Video could find they owe a little more next year, as a report from VTDigger indicates lawmakers in Vermont are considering passing a tax on streaming services to help fund public access television channels which have seen their revenues declining thanks to the rise in cord-cutting in recent years.
- Vermont’s 24 public access TV stations get 90% of their annual funding from cable companies.
- Declines in cable viewership have led to revenue drops of as much as 20% at some stations.
- Streaming providers have offered testimony against the bill, saying it might force them to raise subscription costs.
The proposed tax would see 5% of gross annual receipts collected from Vermont customers by streaming services go into the state’s coffers. That’s the same percentage that cable companies are required by Vermont state law to set aside in order to fund community programming. Cable channel distributors who do not agree to this tax are not allowed to operate in the state.
Vermont has a total of 24 public access TV stations which serve communities with ultra-local content. These channels get around 90% of their total funding from cable companies, but the increased rate of cord-cutting in recent years has driven those revenues sharply downward. In 2023 alone, top cable and satellite firms lost nearly 7 million customers, and one Vermont public access station has seen its revenues decline by 20% since 2016 thanks to cable losses.
“We’re seeking a level playing field,” Lauren-Glenn Davitian, public policy director for Vermont’s Town Meeting TV told members of the Senate Finance Committee. “The trends are clear … the funding for community media is declining.”
The tax could generate as much as $8 million per year for these channels. It’s currently working its way through the Vermont Legislature, and is slated for a final vote of approval in the Senate on Friday before heading to the House for further consideration.
Could Tax Lead to Higher Streaming Prices for Vermont Customers?
As can be expected, representatives of streaming services have come out strongly against the tax. In September 2023, Netflix joined with Disney+/Hulu, Max, Paramount+, Peacock, and ViX to form an advocacy group called the Streaming Innovation Alliance, which promotes sensible reforms in the streaming industry.
The Alliance submitted written testimony to Vermont lawmakers regarding the proposed tax. In the early February letter, the SIA implies that the tax would force streamers to raise their subscription prices to compensate for the lost revenue, and tried to argue that levying taxes only on streaming providers created an unfair business environment. Cable companies would still be charged annual fees to help fund Vermont public access stations in addition to the proposed streaming tax, a fact that is conveniently ignored in this argument.
“We oppose any regressive new taxes or fees that single out streaming video services and the Vermont consumers who value and use them,” SIA’s letter reads.
At least one Vermont lawmaker thinks the SIA is bluffing when it threatens to raise prices for Vermont customers. The bill’s sponsor Senate President Pro Tempore Phil Baruth (D/P) said he thinks having to compete against other streaming platforms will help convince streaming executives to keep prices where they are for the time being.
“Which is more important to them — having a lower price point, or picking up the couple of million dollars in additional costs that they’re going to accrue?” he said.
Still, there’s reason to believe that streamers aren’t bluffing when they say a new tax would force them to raise prices for consumers. A recent report from Stream TV Insider gives details on how Netflix customers in Florida must now pay an additional 5.07% on top of their standard bill, thanks to a new state communications services tax. That levy is similar to Chicago's Amusement Tax, which has been charging streaming providers for operating in the city since 2015. Streaming providers there have long since passed the costs of that tax onto consumers.
The Vermont streaming tax seems to stand a good chance of passing, and audiences in the state may well think that being charged a little more for streaming to ensure public access TV stations remain on the air is worth it. Streaming customers in the state will want to keep an eye on their bills if the law does pass, as providers could start charging extra fees to ensure their bottom lines are not harmed by the tax.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”