Louisiana takes first step toward taxing digital streaming services
Anyone in Louisiana who subscribes to a digital streaming service such as Netflix, Disney+ or Hulu could eventually see an increase in their bills as part of Gov. Jeff Landry’s package to rework the state’s tax structure.
The Louisiana House Ways and Means Committee advanced House Bill 8 with no opposition Monday. It applies the state sales tax to several digital products and services including online news subscriptions, video games and smartphone applications. Communications tools such as Zoom would also be taxed.
The state currently taxes downloads of digital books, movies and music, treating them as tangible products. The author of the proposal, Rep. Ken Brass, D-Vacherie, said 44 states already tax digital services, making it an easy transition for businesses to collect and remit tax revenue for Louisiana.
Ways and Means member Rep. Rashid Young, D-Homer, called Louisiana’s transition to taxing digital services a response to changes in the marketplace.
“Blockbuster used to exist in a physical form. You would go and rent a DVD … But because of a market boom, we now do that in a digital form,” Young said.
Items that are excluded from the bill include stocks and bonds, internet services and any professional services that are delivered in electronic form – such as telehealth and banking. Internet services and digital telecommunications are already taxed separately under state law.
The Legislature’s fiscal staff applied a 4% sales tax to calculate how much revenue Brass’ bill could generate annually, although Landry’s tax plan assumes renewal of a 0.45% temporary sales tax that expires June 30, 2025. It’s estimated the new taxes would generate almost $40 million annually for the state, though some lawmakers on the committee called that a low estimate.