This has obviously caused a bit of a stir, so subscribers to a variety of streaming services have sued the city citing that the tax is illegal. Chicago has of course argued in favor of the tax and will be fighting the suit in court. The suit claims that streaming taxes come in at a higher rate relative to other similar “amusement” taxes seen locally.
It’s an incredibly complex issue, as for a local tax to be legal, there are certain precedents set about what exactly defines a local tax. We fully expect to see similar taxes increased as cities continue to see local sales tax decline as more consumers turn to digital services for purchases.
The ruling in Chicago will certainly set the tone for these types of taxes nationally, likely determining, at least in the short term, how other cities plan on proceeding with this potential new revenue stream.