Massachusetts “Netflix Tax” Bill Would Impose 5% Fee On Internet Streaming Services

August 1, 2019 – The Massachusetts legislature is considering a bill, H.4045, which would regulate and impose a fee on the commercial sale of streaming entertainment services to individuals and businesses in Massachusetts.

The intent of the bill is to “establish a comprehensive statewide policy concerning the recovery of municipal costs for the management and maintenance of digital infrastructure in the public rights of way.” Representative Paul McMurtry, a Democrat from Dedham, Massachusetts and the primary sponsor of the bill characterizes the proposed law as a way to stop Internet streaming services like Netflix and Hulu from getting the use of public rights of way for free, unlike traditional cable TV providers. He gave the following comment to Patch.com:

“Multimillion-dollar media companies are using our public rights of way to deliver their product, yet are not paying their fair share for that use. Fees charged to traditional cable providers support our local community media centers which are an important resource to local public, educational, and government news and information. As consumers are offered alternative streaming methods, we need to modernize our law to assure that community media centers are supported.”[1]

5% Fee On Streaming Providers’ Gross Revenue

If passed, the H.4045 would impose a 5% fee on any streaming entertainment service operator’s gross revenues derived from the sale, lease, or monetization of streaming entertainment to individuals and businesses in Massachusetts. A “streaming entertainment operator” is defined as “any company, entity, or organization that provides streaming entertainment services and delivers such entertainment via digital infrastructure.” A “streaming entertainment service” is defined as any paid service with more than $250,000 in gross revenues from users in Massachusetts that sells access to audio, video, or computer-generated or computer-augmented entertainment and delivers such entertainment via digital infrastructure. Accordingly, streaming services that earn less than $250,000 in gross revenues in Massachusetts would be exempt from the fee.

Streaming Entertainment Fund

Fees paid by streaming entertainment operators will be held in a Streaming Entertainment Fund, which will distribute money bi-annually according to the following formula: One-fifth of the fund will be distributed to the Commonwealth General Fund; Two-fifths will be distributed to municipalities and local governments and further allocated proportionally based upon population; and (iii) Two-fifths will be distributed to community media centers and further allocated proportionally based upon population. The bill has been referred to the legislature’s Committee on Telecommunications, Utilities and Energy.

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[1]  “Netflix Tax” Proposed In Massachusetts, Jimmy Bentley, Patch.com (Aug. 2, 2019), https://patch.com/massachusetts/dedham/massachusetts-considers-fees-tv-streaming-giants.