Lawsuit filed to block Chicago's 'Cloud Tax'

A lawsuit filed Wednesday seeks to block a new Chicago tax that took effect last week.

CHICAGO (FOX 32 News) - A lawsuit filed Wednesday seeks to block a new Chicago tax that took effect last week.

City Hall estimates the 9 percent tax on internet streaming services such as Netflix, Amazon Prime, Hulu and Spotify will yield about $5 million. But some subscribers FOX 32 talked to don't like it at all.

Natalie Bezek uses Spotify to stream her favorite music through the internet. She's a plaintiff in a new lawsuit seeking to block the new 9 percent city tax added to her bill beginning this month.

“I didn't think it was fair that just because I live in Chicago I should be taxed additionally on it,” said Natalie Bezek of Illinois Policy Institute.

Mayor Rahm Emanuel's Administration says "fairness" is one reason the tax is now being applied to internet streaming of songs, movies and other programming. That content has long been taxed when delivered via big screens, cable TV, videotape or DVDs.

Few consumers noticed, but they're noticing now that the tax has gone digital.

“Streaming services already have their own problems. Then you want to add more money to it. So, I just feel like, "No!" Taxing, stop!” said Columbia College student Fred Jones.

Jeffrey Schwab is a lawyer suing to invalidate the tax. He claims it violates the federal Internet Freedom Tax Act. He also argues the City Council should have voted before applying the tax to digital streaming services.

“It's a bad tax. It's going to increase the cost of subscribing to these services by nine percent, which isn't insignificant,” said Schwab

Some subscribers don't want to pay City Hall's unpaid bills.

FOX 32: We owe all these pensions. We need some money.

“That's true. But raising streaming software that all of us college students binge on is not a way to do it,” said student Ryan Horacek.

“We already have to pay for our phone bills and all this other stuff. So, to add on a 9 percent tax, that's crazy,” said Atavicka Ware.

A spokesman for City Hall's top lawyer told FOX 32 the following: "we are confident (THIS) is a valid application of the existing Amusement Tax. We have every intention of vigorously opposing this lawsuit."

 App Store Get it on Google Play

  • Popular

  • Recent

More Stories You May Be Interested In - includes Advertiser Stories