The city of Chicago hasn’t been bringing in the revenue it needs to bandage up its current financial mess, but many residents and businesses in the Chicago area have begun voicing …
The city of Chicago hasn’t been bringing in the revenue it needs to bandage up its current financial mess, but many residents and businesses in the Chicago area have begun voicing their discontent with the newest tax policy and stating that city officials have hit a new low.
Starting on September 1 of this year, the city will be starting what it calls a “cloud tax.” This tax would place a 9% fee on paid streaming services that use cloud-based platforms; services like Netflix, Hulu, and Spotify will all be required to pay an extra fee, which means that the prices of these services will certainly go up.
Business Insider and Crain’s Chicago Business report that the “city amusement tax” is actually already in place, although it currently only applies to tickets purchased for sporting events and concerts. The newer cloud tax would be considered an extension of this amusement tax.
Lawmakers also explained that the space used by cloud computing services is considered property — city property — and the businesses that offer cloud-based services are essentially “leasing” that property.
The Chicago Tribune reported that the city expects to bring in about $12 million annually just from the cloud tax alone, which will certainly help the city climb out of its black hole of debt.
But if individual businesses suffer from the tax, the extra revenue that the city brings in won’t be very helpful in terms of financial stability. Recent estimates show that about 84% of companies that switched to the cloud ended up saving money, so it’s clear that the driving force behind cloud-based services is first and foremost cost-effectiveness.
In light of the many protestation, Chicago officials are reportedly considering to place startups in a group exempt from the cloud tax — but as for the other businesses, they’ll be left to fend for themselves.