Consultants scheme to raise taxes at city halls
Behind closed doors at Southern California city halls, a consulting firm has been telling local officials it’s OK to increase taxes without public input. The consultants get paid, the city gets paid and taxpayers are forced to pay new taxes that sneak their way onto their consumer bills.
The targets of these new tax proposals are Netflix, Disney+, Amazon Prime Video, Peacock, HBOMAX, Hulu, Spotify and everything else you stream.
Cities throughout California impose what’s called a utility users tax, which is placed on utility services and must be approved by voters. Originally created as a type of “user fee” for accessing public space to provide services to customers (think electric rights-of-way, digging up streets to provide sewer/water access, etc.), the tax has evolved into a major revenue source for many cities — and a major cost driver for the average Californian.
Consultants at a firm called Avenu Insights & Analytics are advising your local elected officials to expand the definition of “utility” to include video streaming services — without your approval. If you listen to their spin, characters like Ted Lasso, Midge Maisel and Michael Scott are actually utility workers; and Hollywood is no longer part of the entertainment industry, but rather a utility provider like your electric company. While stranger things probably do exist in the tax world, we are watching a reboot that needs to be canceled before it even airs: Taxation Without Representation.
As these consultants go from city to city selling their scam for profit, they look at each city’s voter-approved utility users tax ordinance. Then they draft a legal memo claiming that the ordinance previously approved by voters actually applies to streaming services. In many cases, the ordinances were first adopted by voters decades ago, when people still were renting VHS tapes from Blockbuster.
The consultants’ tactic would tax not only the streaming of your favorite television shows and movies, it also would capture any paid video content streamed over the internet — ESPN+, Peloton, New York Times, PBS, Youtube Premium, and children’s educational content, to name just a few.
Their scheme to start taxing streaming services is an endrun around state and federal constitutional protections and is illegal. We need local leaders who will represent taxpayers and stand firm against a tax-raising gimmick when they see one.
At a time when everything keeps getting more expensive, sneaking a new tax on your streaming bill could be relatively easy for experienced politicians and greedy consultants — but it couldn’t be more tonedeaf or come at a worse time for hard-working Californians.
Inflation is expected to hit nearly 9% this year. Consumers continue to see rising costs, with the price of gasoline, milk, eggs, clothing and everything else going up on a daily basis. Local governments should be doing their part to help families by keeping costs down.
The consultants have pushed their agenda by circulating legal memos and lobbying local politicians to get their scam adopted, but they can and must be stopped.
The California Taxpayers Association has contacted more than a dozen city councils in areas where Avenu Insights is active. We raised several legal issues for each city to consider. Despite our warnings, most of these cities — including Glendale, Hawthorne, Hermosa Beach, Pasadena, Redondo Beach and Santa Ana — continue to pursue the tax without the legally required vote of the people.
Public participation and media scrutiny can be the key to stopping these proposals. Caltax urges you to let your local elected officials know they need to protect their constituents from taxation without representation and reject the efforts of consultants who seek only to pad their wallets at the taxpayers’ expense.