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Could Cities Start Taxing Video-Streaming Services Like Netflix, Hulu?

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SACRAMENTO -- Sacramento is one among a number of area cities exploring the idea of labeling video-streaming services like Hulu and Netflix as utilities and imposing a tax on them.

It’s an idea unpopular with customers who’ve come to rely on a relatively cheap form of entertainment.

"Yeah, taxing it, I don't think it's a good idea,” said Alberto Chavez, a senior at Sacramento State.

Video streaming services are particularly popular among students who have free access to the Internet.

"I feel like as college students we're already paying a lot for tuition, and we're already paying a lot for books," said Alicia Castaneda, a freshman at Sac State.

None-the-less, the city of Sacramento confirmed Monday that they have hired what they're calling a "utilities tax consultant," MuniServices, to explore the possibility of levying a tax on video-streaming services.

MuniServices also counts Citrus Heights, Elk Grove and Stockton among their clients.

"This discussion that some of these municipalities are having right now -- I think they're testing the waters. But there was one community in Pasadena where they were planning to do this and the political backlash was so severe, they backed down," said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

The Howard Jarvis Taxpayers Association has spearheaded initiatives, made into law, that give Californians a right to vote on new taxes. And Coupal says if cities start trying to tax Internet videos they can expect a legal fight from his team.

"There are privacy concerns as well. This is the age of hacking and personal information being out there. Are cities going to find out what you watched on Amazon Prime or Hulu?” Coupal asked.

At the heart of the idea to tax those services is the idea that they are utilities -- like water, or power. And that's a hard sell to taxpayers used to plucking that content from the Internet tax free.