Three area cities support tax on streaming services

With lots of Virginians cutting the cord, municipalities are looking for funds to replace missed tax dollars.

PORTSMOUTH, Va. (WAVY) — When it comes to paying for cable, lots of Virginians are cutting the cord.

And that means those who do so are not paying a 5 percent communication sales and use tax that many cities and towns count on. That’s why the Virginia Municipal League wants to extend that tax to include video and audio streaming, plus prepaid phones.

So far Newport News, Portsmouth, and Hampton back the idea.

Virginians see the current communication tax on things like cable, cell phone, and satellite TV and radio bills. It was enacted in 2006 and was set at the then sales tax rate of 5 percent.  If the tax extends to streaming services on say a $10 Netflix bill, you’d pay an extra 50 cents a month. But the VML wants to extend the communications sales and use tax further, to 5.3 percent, to align with the current sales tax.

But it does not appear the new tax would bring in a lot of dough. Newport News officials estimate the tax would bring in $24 million statewide.  For comparison, Newport News alone receives about $11 million a year from the current communications tax.

Portsmouth Delegate Steve Heretick tells 10 On Your Side he’s doubtful the proposal will get much legislative support. He tells 10 On Your Side passing a stand-alone tax bill is typically difficult and that tax bills have better success when included as part of comprehensive tax reform.

The legislative session begins January 10.